Cmon, we should look at all aspects but every company is different and at different stages of development. It is a good time to be discussing O&G and imo there are more exposed ASX O&G stocks that do not get the attention that SSN has received which is surprising.
I agree hedging has a place to balance risk but most of the risk for many larger companies is because of the large debt. Imo the hedging protects the banks and the level of hedging is a guide to risk. Some were also opportunistic and with hindsight the low cost producers would have been in better position to keep spending if they had of taken more hedging last year to lock in profits.
In SSN's case production has increased, costs have decreased and surplus cash was generated in the last quarter despite the low oil price. Company has issued monthly operating reports to keep market informed and recently given insight into other opportunities being worked on. Compare this with most ASX peers and there market caps and that is why I believe at some point smarter people than me will see this negativity is a bit overdone.
Companies with cash or low debt and low production costs imo don't have the same issues as the larger ones. The smaller ones don't pay dividends and imo if they have these factors are best placed to adapt. That doesn't mean they don't have issues though and atm they all operate in a sector than is no longer the flavour of the month.
Low OP imo is good for those low cost producers with cash. Production is cheap to buy now and this provides opportunity which is currently better than drilling. Alternatively produce out existing production and put the effort into developing new plays for the longer term.
The covenants should be monitored and hopefully we will get more update in the upcoming June reports.
Cheers
SSN Price at posting:
0.4¢ Sentiment: Hold Disclosure: Held
