Australian (ASX) Stock Market Forum

HOG - Hawkley Oil and Gas

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Starcraftmazter said:
The thing I really dislike about this stock, and what keeps me from buying, is the complete lack of liquidity. I can't even buy any significant amount of shares without significantly affecting the SP, which seems just insane :banghead:
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I think there's a lot of people sitting on losses with this one (including me) and are waiting for Chets results, not much more you can do with it really.
 
Poverty has nailed it with HOG. There has been a long drawn out end game with the Chets drill which seems to have exhausted some peoples patience. Hence the exits in the last few days.

On the other hand anyone who wanted to buy in has probably already done so and can't/won't put more money in.

On its current price it's an absolute steal. It is currently cash flow positive and could comfortably support another drill into the Sorochynska field which will double returns inside 6 months. The Chets drill has 4 high probability oil bearing profiles - B20, B24,B25 and B26. What is the likelihood that all of these profiles will be dry ? The risks at the moment seem to be the difficult drilling situations which seem to have been handled effectively if a little slowly. And from a investors POV there isn't a "buzz" around the stock which one might expect in a more ebullient market.

But it is making very good returns that should only(IMHO) get much better much sooner.
 
A rather bad day for HOG, equaling a 52 week low :( a lot of shares were dumped today, and with the monthly announcement due in a few days got me worrying. Fingers crossed for good news!
 
nchardon said:
A rather bad day for HOG, equaling a 52 week low :( a lot of shares were dumped today, and with the monthly announcement due in a few days got me worrying. Fingers crossed for good news!
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I think many investors have badly lost their nerve in exiting at this stage. Just on current cash flow and proven reserves HOG is very cheap. After re visiting the analysis of the Chets field I can't see how the current drill won't strike oil at either the B20 or lower horizons.( But this is not an infallible pronouncement ..)

Mind you if enough people want to sell regardless of proven value the SP can still fall ; in exactly the same way as the SP can rise regardless of facts on the ground
 
Well about 600,000 went through at 20c - if there was a nervous or impatient seller, there must have also been a willing buyer.

I prefer to ask what is the likely scenario in mid 2012? Two producing wells at Sorochynska, a gas plant in the pipeline, and maybe something from Chernetska.

Monthly drilling report due tomorrow - it would be nice if they are into the paydirt - anything less would be bound to dislodge a few more impatient holders. We shall see.

Two day 5 min chart:

Dare I mention the bullish divergence in the MACD?

HOG 26.jpg
 
I was contemplating buying today but the volume is just so damn low on this constantly, I can't get over this worry.

And why would someone dump so many shares ahead of the announcement anyway? Just seems very fishy :confused:

If that report turns out to be negative, I would expect the ASX to take action on insider trading....
 
Starcraftmazter said:
I was contemplating buying today but the volume is just so damn low on this constantly, I can't get over this worry.

And why would someone dump so many shares ahead of the announcement anyway? Just seems very fishy :confused:

If that report turns out to be negative, I would expect the ASX to take action on insider trading....
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I suggest that the lack of volume is because

1) There are no institutional buyers and very few private investors chasing stock
2) There is little speculatative share trading activity

Doesn't leave much else does it ?:eek:

I don't think the end of month drilling report will be conclusive. I suggest they are still drilling or possibly evaluating a core. But we'll find out soon enough. (The Nov 7th note said a late Nov/early December strike.)

It does seem strange that people would sell out so close to the end of the Chets drill. However as I and Wrong Un point out HOG already represents excellent value at the current price.
 
basilio said:
I suggest that the lack of volume is because

1) There are no institutional buyers and very few private investors chasing stock
2) There is little speculatative share trading activity

Doesn't leave much else does it ?:eek:

I don't think the end of month drilling report will be conclusive. I suggest they are still drilling or possibly evaluating a core. But we'll find out soon enough. (The Nov 7th note said a late Nov/early December strike.)

It does seem strange that people would sell out so close to the end of the Chets drill. However as I and Wrong Un point out HOG already represents excellent value at the current price.
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Another positive announcement today from HOG! Hopefully will see a rise especially with the overall market up. Looking forward to when Chets drill finally hits its target and we get some solid information on how its going to turn out!
 
Just reading through the investor presentation for 29th Nov.

I'm puzzled by it. In my eyes it seems very, very cautious in its outlook. It highlights the dependence to date of only one well. But that well is quite profitable and if the current SP is measured against the income from the Sorochynska well alone the company is underpriced. The fact that they can drill a second and subsequent wells with 100% certainty of doubling and trebling income doesn't seem to be acknowledged.

I'm also surprised that they havn't waited for the 1-2 weeks to identify the results from the Chets drill. They are literally 80 metres away from the first profile. I assume a couple of weeks should be sufficient to determine the size of any returns.

One point that does bear noting is the the long wait between drills. It would be great if somehow

1) There was a way to improve drilling technology to cut drilling times and hopefully costs and thus speed up development.
2) There was sufficient cash, investment or earning capacity to enable 2-3 drills to be undertaken simultaneously.

Going at basically one drill a year just seems archaic.

The report suggests that HOG is not a glamour company because it is not into exploration merely production.

I'm so surprised at this statement. The indications from the initial geological reports were that there was both certainty of oil and gas in the leases they have acquired and the possibility of substantially higher reserves than previously indicated. To date the three fold improvement in the Sorochynska field and larger than anticipated gas and oil flow rates bear this out.

IMO HOG and its shareholders should do very, very well if development can be smartened up in the next few years. And even if just tiddles along earnings next year should at least double. Not shabby at all..
 
Well they did say they want to look for more oil in the mediterranean. I agree they don't seem to be very confident, and hoarding quite a bit of cash while not planning to do much with it? :eek:
 
One of the reasons that HOG have been drilling so slow is they are relying on Legacy Imaging data. This brings Structure into play when drilling – Thus increasing risk and decreasing speed.

I see that Exxon Mobil and Shell have just signed on to develop Shale in the Ukraine. Hopefully HOG can get a hold of whoever is going to be doing their imaging and get some good digital data on their future wells. They could also pay attention to the new drilling techniques that have been developed lately in the Shale area.
 
I agree, Reeftip, modern techniques have to add value to their licences. From what I have read over the past year, the company are onto all the clever stuff, while balancing costs and benefits eg Western drilling gear from Romania is faster than Russian but costs more.

As far as speed of drilling is concerned, sure, time costs, but in the end what really matters is whether they hit commercial paydirt or not. Selling because the drilling is "too slow" is a recipe for kicking oneself.
 
Monthly report out today. Almost there with the Chets drill. It will take another month to determine the amount and viability of any oil finds. (although given they found it 30 years ago we should assume it has gone away.

The next Soroch drill will start in January rather than December as planned. I think these delays are irritating rather than disastrous. Yes it would be great to "blast through" perceived inefficiencies. But as was pointed out the current drill is only 14 days behind the original projection. Everyone just hoped it could be done better.

But in the end HOG is producing $24m a year net from its first production well with around $560m of reserves already booked. It's currently valued at $61m. I think it is excellent value

http://newsstore.fairfax.com.au/app...te.ac?get_prices=Get+prices+&+charts&code=hog
 
There will regular updates over the next few weeks as the Chets drill is evaluated. Because it is so close to distribution lines it should start paying off quite quickly.

It will be interesting to see how the market responds in the current circumstances. It's a fairly simple business pumping and selling oil/natural gas after establishment and infrastructure is done. :)
 
nchardon said:
HOG Just took a **** and it smells!

Any thoughts on the new release and the huge market dump?
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Yes; I'm very happy I decided not to buy in due to low liquidity :D

Not knowing anything about drilling for oil, I have absolutely no idea what they mean in their announcement (they should really have a more general explanation - perhaps that is why the announcement spooked the market?).
 
Starcraftmazter said:
Yes; I'm very happy I decided not to buy in due to low liquidity :D

Not knowing anything about drilling for oil, I have absolutely no idea what they mean in their announcement (they should really have a more general explanation - perhaps that is why the announcement spooked the market?).
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From my understanding their first target was a dud, so they will continue to drill deeper which will take another 2 weeks or so. And it is also my understanding the next target and its potential oil results should be totally independent from the firsts dud results.
 

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