I'm not arguing with you here. I agree buying back shares would...

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12/03/20

06:55

Post #: 43439477
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Originally posted by cmonaussie: ↑

What would prevent them from buying back shares .... they have the FCF (remember the comment's context assumes no drilling) ... Is there any point to keeping cash? ....

I don't believe there is any covenant in their credit agreements that requires surplus cash to be applied to debt?

Based on FCF yield principles, buying back the stock at these prices (and cancelling it) is the best return.

Paying a dividend, while essentially the same on the balance sheet, differs with individual shareholder tax implications. With the buyback, tax is deferred and it will be capital gain (loss) when shareholder sells.

It will be interesting to see what EM will say ... the one thing he can't say is BAU ... what's the survival plan in a sub $40/bbl world for 2020 (or longer). There is no drilling plan that makes sense is there?

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I'm not arguing with you here. I agree buying back shares would make sense for the investor. My point is that you are assuming they can buy back 1/3 of the company at current share prices but i don't think 1/3 of the shareholders would sell at current prices

SDNE should be focusing on survival for now. If they think they can but back shares while still surviving for the next 12 months, then they should do that. I'm sure Eric has been on the phone constantly with the bank to get their thoughts on what their options are

SEA Price at posting: 16.5¢ Sentiment: Hold Disclosure: Held
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