HK
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wilmawatts
- Posts: 685
- Joined: Fri Apr 01, 2011 10:12 am
Re: HK
I agree. But I couldn't take the beating anymore and sold.
Re: HK
Halcon Resources Corp. (HK): An updated Net Income & Cash Flow Forecast model has been posted under the Watch List Tab.
HK now looks grossly oversold to me. My Fair Value Estimate is $7.40 (compares to First Call's Price target of $5.69).
The share price got hammered when the company announced a reduction in the capex spending for 2014. I think it is a good thing to spend less money, primarily because they did not reduce their production guidance (38,000 to 40,000 Boepd for 2014). Lower spending will be from lower costs per well as they move to more pad drilling. Several rather negative articles were written after the reduced spending was announced, which seem to explain the selloff. HK's production was up a stunning 250% year-over-year in 2013 and there is no doubt they cannot sustain that level of growth. The midpoint of their 2014 production guidance would be ~18.5% production growth in 2014. That is not to shabby.
There is some concern that the company is over-leveraged. It does have a lot of debt, but it also has 80% of forecast production hedged at good prices; collars with floors of $90.69/bbl for crude oil and $3.77/mcf of gas.
Assuming they hit the midpoint of the production guidance, operating cash flows should be approximately $600 million and they are selling some non-core assets which should cover the rest of their capex budget.
At today's share price HK looks VERY INTERESTING to me. I will take a hard look at the Q4 results and their year-end reserve report, which should be very impressive. They drilled a lot of wells in 2013, which should generate a significant increase in proven reserves. Operations updates on El Halcon and the Utica Shale are needed.
HK now looks grossly oversold to me. My Fair Value Estimate is $7.40 (compares to First Call's Price target of $5.69).
The share price got hammered when the company announced a reduction in the capex spending for 2014. I think it is a good thing to spend less money, primarily because they did not reduce their production guidance (38,000 to 40,000 Boepd for 2014). Lower spending will be from lower costs per well as they move to more pad drilling. Several rather negative articles were written after the reduced spending was announced, which seem to explain the selloff. HK's production was up a stunning 250% year-over-year in 2013 and there is no doubt they cannot sustain that level of growth. The midpoint of their 2014 production guidance would be ~18.5% production growth in 2014. That is not to shabby.
There is some concern that the company is over-leveraged. It does have a lot of debt, but it also has 80% of forecast production hedged at good prices; collars with floors of $90.69/bbl for crude oil and $3.77/mcf of gas.
Assuming they hit the midpoint of the production guidance, operating cash flows should be approximately $600 million and they are selling some non-core assets which should cover the rest of their capex budget.
At today's share price HK looks VERY INTERESTING to me. I will take a hard look at the Q4 results and their year-end reserve report, which should be very impressive. They drilled a lot of wells in 2013, which should generate a significant increase in proven reserves. Operations updates on El Halcon and the Utica Shale are needed.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group