Hi.I bought in because the yeald will still be better than what...

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Hotazel

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03/04/20

22:37

Post #: 43872319
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Originally posted by Fidosnos: ↑

The company has a market cap of around $4b and net debt of $3b, $300m of which is due in September. In 2019 they made a net profit of $312m which is only 3.3% of their market cap until February -and a dividend yield of around 2.5%. In 2019 at oil prices around $60-70 they made $11.44 net per barrel. Imagine what they are making at current oil price.

Production cost is $12.50 per barrel equivalent. This is direct costs and does not include exploration, development etc costs, and not even other essential operating costs. Their cash and liquidity levels have been falling for four of the past five years. The barebones minimum cost including sustaining capex and interest payment is $21.50 per barrel which is around current oil price. I haven't heard them say anything about hedging. It would be a shame if they hadn't hedged.

Don't get me wrong - I have a lot admiration for companies like OSH that develop massive multi-decade projects in exotic places. No doubt their 2P and 2C resources amount to something like $70-80 billions. But it is the short-term crunch that attracts the sharks and vultures and represents high risk. However, my point is that this risk combined with overvaluation is the central problem. For years they have been trading at above $6 delivering a lousy 2-3% return to shareholders. Even at the current price and a 2019-level profit performance the yield is modest at 5.3%.

They could get over this crunch and the shares might head back to $6-7 for all I know. My position is, I cant see how that is justified or can be planned for other than the argument that it has happened before.

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Hi.
I bought in because the yeald will still be better than what I get at bank. Bought some over past weeks with last purchase today. Average $3.18.
intend holding till everything normalised and looking for a 60% profit in6-8 months time. Or is that a bit optimistic?

OSH Price at posting: $2.73 Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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