HOG - Hawkley Oil and Gas

poverty · 1 September 2011

After months and months of NO BUYERS finally some buying pressure on the SP

basilio · 15 September 2011

Looks like more shareholders have decided to bail out of HOG. Some big sales yesterday pushed the SP to 20c

The new timeline for the Chernetska drill to hit the oil/gas zone is now October. Obviously the drill through the Bishopite section was trickier and took longer than expected.

It will be interesting to see if any positive news makes a lasting impact in this market. We might just have bottom trawlers and day traders left which probably won't be enough to get a sustained lift in SP.

Perhaps if there is a decent strike in Chernetska then declaration of a small dividend when production is established might do the trick.

kermit345 · 15 September 2011

If they have success at Chernetska i'd want them to start drilling the next planned hole and fast-track the gas plant development if possible.

They are basically running at break-even while paying to drill this hole out, if there is success then that instantly goes to the bottom line plus they won't be drilling anymore so it free's up cash-flow as well.

I have my fingers crossed for success as I think that could really make or break the share price.

Wombus · 15 September 2011

basilio said:
The new timeline for the Chernetska drill to hit the oil/gas zone is now October. Obviously the drill through the Bishopite section was trickier and took longer than expected.

Perhaps if there is a decent strike in Chernetska then declaration of a small dividend when production is established might do the trick.

The well was commenced on 05 May, and at that time they said the well will take about 5 months to drill and complete. May + 5 months = October, so they are on schedule

And why would you want them to consider paying a dividend? as things stand they've got enough cash/cash flow to drill to two wells in the short term and build that Gas plant at Sorochynska. I say keep the money and spend it on field development! The last thing we want is more capital raisings or the company to start looking at debt options. Especially if an opportunity comes along for an acquisition (which they have mentioned a number of times as they're looking out for)!

I would like to see more updates about 2nd Soro well, the gas plant and a more detailed development plan and timeline. I certainly feel management could be communicating better, and more often.

basilio · 15 September 2011

Wombus said:
The well was commenced on 05 May, and at that time they said the well will take about 5 months to drill and complete. May + 5 months = October, so they are on schedule

And why would you want them to consider paying a dividend? as things stand they've got enough cash/cash flow to drill to two wells in the short term and build that Gas plant at Sorochynska. I say keep the money and spend it on field development! The last thing we want is more capital raisings or the company to start looking at debt options. Especially if an opportunity comes along for an acquisition (which they have mentioned a number of times as they're looking out for)!

I would like to see more updates about 2nd Soro well, the gas plant and a more detailed development plan and timeline. I certainly feel management could be communicating better, and more often.

I realise my suggestion of a small dividend was an unusual comment in relation to almost all mining companies and in particular companies just starting develop their operations.

As I see it, mining companies traditionally pay SFA in dividends and tell the market that continual development and increasing SP as a result of these earnings is sufficient return for investors. Meanwhile management usually make sure they get top salaries which could conceivably be a large part of total earnings. As one example BHP is currently sitting on a $30billion cash box and refuses to make any extra dividends to shareholders.

I think we are now entering quite difficult times economically and that stocks will not rise anywhere near as traditional earnings ratios would suggest. In this scenario I could see many profitable mining companies just paying the directors and staff and shareholders struggling. For example I think HOG is staggeringly undervalued given it's current positive cash flow and extremely good prospects.

A small 2c a share dividend would cost HOG less than $4m (191m shares on issue) . Spread across the year it would offer a immediate yield of almost 10% on the current SP (this would have to jump with a strike surely!) and should certainly underpin the SP and signal investors that the company is serious about returning profits to all participants.

If the Chernetska drill is as successful as predicted $4m would be very doable while still allowing plenty of development funds.

And I agree - it would be good to have more information about reserves, the situation with the gas plant and the extra drills. I suspect however the locals are just not that efficient or we are just unrealistically impatient.

tothemax6 · 16 September 2011

basilio said:
As one example BHP is currently sitting on a $30billion cash box and refuses to make any extra dividends to shareholders.

Actually BHP has raised its dividends recently (http://dynamicdividend.com/bhp-billiton-dividend/), in excess of the expected raise, and Kloppers has made statements regarding his intention to continue raising the dividend in the future.

basilio said:
For example I think HOG is staggeringly undervalued given it's current positive cash flow and extremely good prospects.

Then hold on and stop worrying.

basilio said:
A small 2c a share dividend would cost HOG less than $4m (191m shares on issue) . Spread across the year it would offer a immediate yield of almost 10% on the current SP (this would have to jump with a strike surely!) and should certainly underpin the SP and signal investors that the company is serious about returning profits to all participants.

HOG returning $4m a year to shareholders when it is an early stage oiler, expanding hell-for-leather to increase its oiling infrastructure, would be madness. If anything it would scare shareholders away once they collect their dividend. It would indicate that rather than being a dynamic expanding project, the directors can't see any better use for $4M than to simply give it back.
This is simply not how oil projects work, and it won't happen. Only when oil is spewing in all directions and there is no more room for expansion, will the profits then be diverted into dividends. HOG is not at that stage.

basilio · 16 September 2011

I see your point Max and understand that investors would expect surplus funds to be put into further exploration and development.

I was making two points. Firstly that traditionally mining companies put dividends for shareholders a distant last in priority. The BHP example was the most recent and most obvious. Yes the dividend has increased but BHP is still sitting on a mountain of cash.

Secondly I am questioning the overall cash flow priorities of companies. Just how much are CEO's and directors worth ? How much of the profits should they take versus wages to staff and dividends to the company owners ie shareholders.

I'm not suggesting that HOG management are taking too much of the cake (it isn't there yet ! ) I was suggesting that setting some dividend guidelines ahead of big bonuses to management would be a good signal and that this action could also strengthen investor interest in the company in harder times.

Flipper · 21 September 2011

Nice to see the SP close up 3c or 13% today despite wider market struggles. An amazing feat but does anyone know why??? Is there information about to be released?

ob1kinobi · 21 September 2011

Flipper said:
Nice to see the SP close up 3c or 13% today despite wider market struggles. An amazing feat but does anyone know why??? Is there information about to be released?

Someone with deep pockets, seems to be accumulating?

This isn't the first time there has been a volume spike and a largish % gain. However most of these gains have been sold off within two weeks or so.

my

basilio · 21 September 2011

Volume was significantly higher yesterday than previously and I think it was all real buying pressure with no immediate trading sales.

The current Chernetska drill has to be getting very close to reaching the expected oil/gas profile. (This has already been proven years ago ) HOG is cash flow positive on it's current well and the new one is expected to be many times larger - again on the basis of the previous drill.

The current SP doesn't even reflect the value of oil and gas already flowing let alone what should be accessed in a few weeks. On company fundamentals HOG should be doing much better but the market as a whole is in a funk hence the recent collapse.

One would hope that if/when the drill strikes home analysts will do their sums and investors will re recognise the value.

RNI · 28 September 2011

Has anyone read the recent announcement regarding the presentation they did in Freemantle in September 2011. They also presented in Singapore more recently about the same time as the share price rose. Anyone care to comment on the September presentation? Share price has dropped since?? or is it just the general market.

emile33 · 1 October 2011

Another 2 weeks or so before the target depth has reached.
now we wait for hopefully another good well ....

basilio · 5 October 2011

Something to think about.

The Chernestaka drill is about 2 weeks away from intersecting the first horizon. It seems highly likely from earlier drills (through not certain) that it will strike a nicely profitable oil/gas seam which should make the current SP look even more ridiculous.

Does anyone think that in this market a reasonable strike will actually boost SP for any significant time ?

Or is the overall market just too depressed and negative ?

WRONG'UN · 6 October 2011

Well, Basilio, how would you know what depressed and negative people might do to a share price - I try to just stick to the facts, which are as you have noted, and remain optimistic - this one has required a lot of patience!

In the meantime, for inspiration, I look at some of the gains made after the 2009 market low - the 10 baggers start from humble beginnings.

RNI · 8 October 2011

They are presenting at more and more O & G conferences all around the world and really getting noticed. That is why the share price had had several quick rises. People are really starting to find out about it and want in, which is great, and the publicity is vital. There is another coming up soon also, so watch the sp, and of course the results of the Chets well, which we are all holding out to know.

Another point of interest is that Shell is soon to commence drilling in the Ukraine and in the same basin at hog, which is great news. Shell will bring to Ukraine all the latest equipment and technology and there will possibly be a lot of interaction between the various companies, and sharing of information etc, which our hog gang will possibly gain from.

They are also working on getting all the paper work ready and passed, so they can start tendering for the building of the gas plant, which they think will bring a big improvement in the production amounts, as the gas plant they are using is very old and not functioning as well as a new one.

basilio · 18 October 2011

HOG is starting to move ahead of reaching the money spot in it's Chet's drill. Has added 6 cents in a couple of days and now pushing 28.5c.

Trading Halt has been called until Thursday. The report be will about upgrading the reserves rather than the Chets drill. Be really good to see what comes up...

ChrisJH · 18 October 2011

Finally some positive price movement. How does a trading halt work? Is it put in place by the company? And it means either really bad news, or really good news, yeah?

AngusSmart · 18 October 2011

ChrisJH said:
Finally some positive price movement. How does a trading halt work? Is it put in place by the company? And it means either really bad news, or really good news, yeah?

Price sensitive announcement to come out (put in place by the company).. about reserves report.. can go either way! but you'd think its positive news!

emile33 · 19 October 2011

Re: HOG - Hawkley Oil and Gas Trading halt

AngusSmart said:
Price sensitive announcement to come out (put in place by the company).. about reserves report.. can go either way! but you'd think its positive news!

http://www.proactiveinvestors.com.au/companies/news/20882

Wombus · 19 October 2011

Re: HOG - Hawkley Oil and Gas Trading halt

Summarised from the company's 30 Sep 11 Announcement:

As of 29 September, the well was at 3,158m drilling at approx 90m a day.

With an expected TD of 4600m, this put an approximate time to reach TD of 16 days, or 15 Oct. Noting we are now 4 days past that, anyone want to wager there will be a drilling announcement accompanying this Reserves Update?

looking back at Soro, it took about 7 days after hitting TD to conduct open hole tests. For comparison open hole test flow rates were about 4.3 mmcfg/d and 160 bbls condensate.

HOG - Hawkley Oil and Gas

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