HOG - Hawkley Oil and Gas

[bennywizard]

Happy to see SPP as part of it. This is why i always hold shares in each account i have, gives you mulltiple bites at the cherry...

That's interesting, I've found that companies don't allow multiples from the same name even if in different accounts, how does that work for you?
Eg with TXN I had them in two accounts but was only able to buy in one. Maybe you have yours in different names?

 

[basilio]

Was just reading the story off the HOG website which in fact was in Australian Financial review discussing the capital raising.

It seems that one of the biggest elements in the capital raising was just giving the "institutions" some skin in the game. As the story goes HOG "wanted to see instituational support as part of it's evolution" and decided that giving them a (cheap) piece of the action was the best way to get some activity by the various funds that advise investors. So if we are lucky we will see a significant increase in institutions chasing HOG scrip in the next few months.

Hopefully anyway...

http://www.hawkleyoilandgas.com/med...ing-20-4-11-131/media-clippings-20-4-2011.pdf

 

[Magic Man]

Hey .. I was having a look in HC and at the moment they are mentioning licenses and expiry dates.. has gotten me a bit on edge,, can anyone elaborate?? thanks and Happy Easter

 

[mel]

From memory in one of their presentations it mentions the permits were for 5 yrs and they started in 2007 so what happens after that Im not sure

 

[Magic Man]

From memory in one of their presentations it mentions the permits were for 5 yrs and they started in 2007 so what happens after that Im not sure

That cant be good for the long term prospects of the stock... there must be some doubt there??

 

[basilio]

That cant be good for the long term prospects of the stock... there must be some doubt there??

Don't get too excited. Short story is that the "initial 5 year licenses which were issued in 2007 are convertible to a 20 year production license upon fulfillment of minimum work programs. The licenses are are not restricted to any particular horizons and are for all the underlying potential fields."

http://www.hawkleyoilandgas.com//me...0805-Moyes-report-46/Moyes-Report-Hawkley.pdf
See section one Introduction and overview.

Obviously it was important that any company taking the licenses actually undertook proper exploratory work with a view to commercial exploitation - which is where HOG is at. No problems

 

[prawn_86]

Quaterlies out today.

4m worth of revenue with 2.6m worth of net cash flows. This will increase next quarter.

So assuming going forward net cash flow of 4m per quarter = $16m pa. Conservative PE of 8 = 128m or roughly 80 -90c per share. I'm at work so dont have full figures in front of me, perhaps someone else can add to this

 

[basilio]

Does look like a good set of figures today. In fact Hawkley is talking of around $40 m a year from the first well. This only partially takes into account the rising price of gas and oil. And as noted there is still room for increased production as the choke is increased.

But the SP is still stubbornly stagnant and in fact has fallen substantially from late February. Dunno why Perhaps all the analysts think the Russian mafia will step in and shakedown HOG when the serious money starts coming in? I would really appreciate an insight into the thinking of any current market analysts who are picking stocks for client portfolios.

Perhaps one way to give HOG a kick would be a dividend announcement later this year ? A 3c a share dividend on around 180m shares would return $5.4 m to shareholders which looks pretty reasonable given the $40m plus income. THAT should open up some interest.. or is it too down market for companies making a decent return to actually share the profits with shareholders?

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It's interesting to review the Hartleys analysis of March 1st where the SP was already 50c.
http://www.hawkleyoilandgas.com//me...s-research-note-117/Hartleys-reseach-note.pdf

 

[kermit345]

basilio, I dont personally like the dividend idea. They are running 1 well and have growth plans for future wells which could potentially fail. I'd much rather they use the cash flows and funds from current equity raising to fulfil growth plans successfully and then start thinking about dividends possibly.

Share price is currently down as there is a capital raising in place and so its been sold down to just above the raising price. In my opinion once the raising drama blows over, their second well has spudded and we near both flows from a 2nd well / larger choke on current well you'll see the share price start to trend upwards.

Therefore i'm not in panic mode at the moment. Don't get me wrong, HOG has its risks, but some further success in their growth plans will surely see this share price book some gains.

 

[Assasin]

hmmm, enjoy your posts Basilio but not sure about the dividends yet. IMO, HOG is to young and to small to consider dividends and all income should be put towards assett growth and lease aquisitions. Then in a couple of years, if your still holding, maybe consider dividends.
I'm not sure anyone buying small cap oilers ever consider's dividends.


Holding AUT, TXN, EKA, HOG, MHM

 

[basilio]

hmmm, enjoy your posts Basilio but not sure about the dividends yet. IMO, HOG is to young and to small to consider dividends and all income should be put towards assett growth and lease aquisitions. Then in a couple of years, if your still holding, maybe consider dividends.
I'm not sure anyone buying small cap oilers ever consider's dividends.


Holding AUT, TXN, EKA, HOG, MHM

It was a rather radical suggestion wasn't it ? The propositon that a quite profitable company should share it's profits with shareholders... (Doesn't that actually sound quite reasonable ??)

On paper and according to the current theories of non/low dividend paying oilers dividends would be off the table. But I wonder if this might just be a ploy to allow mangment to vote themselves some of the very large bonuses they take (Of course this is obviously not the case with HOG at this stage.)

I think it is also worth looking at the figures I proposed. It seems to me that with the $15m plus capital raising, extra income from increased gas/oil prices, further profits from using their own gas plant that HOG could allow a dividend of 3c a share if it it was going to cost around $5.4 m. I also believe it would send a very strong message to the market that HOG had a strong secure and expanding future which managment was prepared to share . All of which would be very good news for the SP

On the bigger picture I think it is time for shareholders in successful energy companies to expect decent dividends. I believe it would help underpin the SP and ensure that the theoritical owners of the company recieve a tangible current reward rather than a paper increase in SP with the actual cash being used for a range of other purposes..

 

[condog]

Basilio i think you better stop sniffing that liquid paper.

A small oil & gas co will not pay dividends, unless they are mad or have no idea how to grow the business. They are right noww presumably in thier fastest growth period with hopefully ROI/ROE of well over 100% p.a. if things go good.

Why would smart managment jeopardise that sort of targeted growth to pay a low % divedend of 3% or less and have shareholders invest it in cash at 5% or spend it. Na, thats not how it works. They will reinvest, reinvest, reinvest, and only when they are running out of ideas or once their ROE start to suffer will they pay dividends.

And thats particularly the case here, because the earnings are offshore and hence do not carry any franking credits, which makes them fully taxable.

On a note about todays reports. Great to see >$4M revenue in 60 days, with over $2.5M free cashflow. Looking good for a $28M free cashflow + Whatever Chets produces. Conservatively imo $200M + mcap if chets flows anything like #201.
# 321 showed some interesting pay zones of both oil and gas. Lets hope those two highly pressurised gas zones are huge reservoirs accross the acerage.

 

[basilio]

I won't try to carry my "dividend " story much further in HOG's case. I agree that at such an early stage of development management would be better off reinvesting such cash into development of future assets

The highlighted part is my main point. I was really trying to argue at what stage do miners redistribute profits to shareholders versus giving managment extra bonuses or finding some development story to soak up the cash. I think this is particularly relevent in some of the larger miners that have been making a killing off high energy and resource prices but are not returning these profits to shareholders.

 

[basilio]

HOG has just released its story on how they are going to spend the capital raising. All good and from the look of it there could be 4 very profitable wells online within 12 months. There will be 2 extra wells at Sorochynksa and they anticipate returns equivalent to the first well (currently returning $22-25m a year)

The Third drill will be at Chernetska. This is the BIG one. The original drill showed 900+ BOED and if the results of Sorochynksa 201 are any indication one could anticipate an even better flow with improved drilling technology. And there are a number of extra sites with known oil and gas deposits in this field

I just noticed on the AUT board that everyone is rapt with $5m a quarter returns and the expectation of increasing yields as more wells are drilled. I think HOG's potential is easily as big as AUT and currently at a fraction of the price.

http://newsstore.fairfax.com.au/app...get_prices=Get+prices+&+charts&code=HOG&f=pdf

 

[condog]

On the one hand if they did the CR for no other reason then to get instos a bite, im furious.

However on the other hand instos if they begin covering the story will bring in buyers.

Arrrggggggggggggg im torn, whether to be furious or grateful. I guess i will hold judgment and see how it transpires.

 

[basilio]

On the one hand if they did the CR for no other reason then to get instos a bite, im furious.

However on the other hand instos if they begin covering the story will bring in buyers.

Arrrggggggggggggg im torn, whether to be furious or grateful. I guess i will hold judgment and see how it transpires. Coondog

And at this point in time there seems to be absolutely no extra interest in HOG. In fact at the close of trade today a couple of needy sellers managed to drop the SP by 1.5c with very late trades.

Obviously a bit early to make judgements but HOG stands as either an extremely good value buy or a mysterious but slighted company waiting to be cut down ?? (How poetic....)

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I think back to the earlier analysis by Hartleys in January which rolled out some modest projections of HOG's potential (which have certainlybeen met) and projected a SP of 68c in three months. It actually reached 56c in January.... but tsands at 36c today.

 

[condog]

And at this point in time there seems to be absolutely no extra interest in HOG. In fact at the close of trade today a couple of needy sellers managed to drop the SP by 1.5c with very late trades.

Obviously a bit early to make judgements but HOG stands as either an extremely good value buy or a mysterious but slighted company waiting to be cut down ?? (How poetic....)

__________________________________________________________________________

I think back to the earlier analysis by Hartleys in January which rolled out some modest projections of HOG's potential (which have certainlybeen met) and projected a SP of 68c in three months. It actually reached 56c in January.... but tsands at 36c today.

I got to say im more comfortable in the red on HOG then in the red on TXN. Both imo have great potential and risk. HOG's first well however imo, means it can fail its second well and still survive. The same cant be said for many other junior oilers. I could be wrong but thats my opinion.

Happy to hold hog, despite my half dummy spit and see what happens, cause if Chets, does come good, oh my god this thing should rocket. Its a while off, but these things tend to build in anticipation, often more so then the positive announcment itself. Some say buy on speculation and sell before the news. Time will tell if thats the case here.

 

[BrightGreenGlow]

Correct me if im wrong but HOG is currently at 36c and the cap raising is at 37c. Therefore who in their right mind would sign up for the cap raising for no discount apart from the ability to gain more shares rather than just a few at 36c... and what if it goes to sub 30c??? weird havent ever seen a stock drop below the CR level before between the current price and CR level before the shares are allocated.

 

[prawn_86]

weird havent ever seen a stock drop below the CR level before between the current price and CR level before the shares are allocated.

I've seen it happen numerous times. Usually happens in a flat/bear market

 

[TabJockey]

Technically this stock is taking a beating, its actually my only holding at the moment because of my bearish feelings about the ASX over the next few months. Either the slide in price is purely technical, or somebody knows something that we dont. I am really hoping its the former.

I thought 42c was a great entry price! The close on the day I bought in was 46c! Easy come easy go as they say.