I think traders/investors and punters are more than aware of the risks of AKK without the need to be 'saved'.
If anyone thinks they need to 'save' people from AKK or the O&G industry they arrogantly assume they know ones trading style and what's best for them.
Those who are currently acting as proselytizers have consistantly missed the point about macro oil conditions and how 1 year ago is not now. OPEC appears to have switched back to a system of price fixing which can greatly assist the likes of AKK and IOG (AKK's neighbour) if OPEC can get production levels under control. With profitable WTI and a likelyhood WTI producers could get to circa 10mil BPD, oil prices are never going to get back to the $100 highs - however OPEC, non OPEC and WTI can probably exist together with a future average price of circa $60 if OPEC does the lions share of production cuts. Although it isn't fair that OPEC (plus Russia) as they will be responsible for the lions share of production cuts that's life - and it is still within OPEC's interest to control their own production amounts in order to gain higher barrel price.
Second, the anti AKK proselytizers have consistantly missed the point that if AKK can get past the cost curve and produce wells quickly and cheaply enough they can start to make some damn good money especially if they can place up to 300 wells and have an average pay back of circa 0.5 years. This is even when you account for diminishing flow rates and other associated costs. The point is AKK needs to stay beyond the cost curve and produce oil profitably in an increasing macro oil price environment. If this makes you uncomfortable thats fine dont trade in AKK.
I can tell you one thing though - if AKK can start to produce multiple wells with reasonable flows AKK's SP will start to rocket. And this is one company who you should be hoping enacts multiple CR's in order to quickly increase well numbers if their per barrel costs are low and if their flows are reasonable. It is all about quick well pay back, good flows, and drill drill drill.
I currently trade in IOG - AKK's direct neighbour. IOG predominately focuses on well work overs and reclamations. They have a cost per well of $35k and they are getting high amounts of gas per well ($100k per month). They have a circa 83% net profit with well pay back time of under a month. Do the maths - its damn amazing. My point is this - with AKK being next door perhaps AKK is going to be hitting a lot of gas too - which is very profitable. Gas over the next 3 months is poised to go up due to the USA hitting their winter with colder than the previous year temperatures
Do not write AKK off - if like IOG they start hitting a lot of gas they could become highly profitable with quick well repayment.
Check out IOG if you do not believe the land is practically virgin. If you think its a lie why is IOG conducting highly profitable business their?
AKK Price at posting:
0.5¢ Sentiment: Buy Disclosure: Held
