HOG - Hawkley Oil and Gas

I topped up today (0.415), cheap iron ore at these prices!

In the grand scheme of things weve had a market pullback of around 5-7% and the japan situation, while horrible, isnt likely to cause massive problems globally unless they have a large scale radiation leak that drifts over China or Tokyo.

If anything now Japan is likely to have stronger economic activity in H2 2011 once the repair and reconstruction phase starts. They will need more Australian resources, more oil, more steel then normal to reconstruct and repair.

So imo todays selloff is a rediculous over-reaction, which in many stocks was reflected in the intra day bounce after the traders all jumped off the cliff this morning.

The situation in the middle east and afric has not eased or been resolved, but also energy supply has not been materially effected either "yet". So im seeing energy prices remaining high. Whilever govts worldwide continue to print money , scarce resources like gold and oil are going to head north imo. Oil prices as i see it are a result of US demand , China and India demand and i dont see them materially reducing for any reason at present.

I bought a large parcel of HOG today on the back of thos weekness and hopefully will continue to buy large parcels tommorrow. Its only a matter of time imo till Aussies realise they have significantly oversold the market. To me this is our usual post May doom and gloom arriving early.

Yes there are numerous simmering issues worldwide, EU debt, EU lackluster economies, US printing money repetatively, US losing its global reserve currency status, Japans recovery and lackluster growth, the middle east and north africa issues, but in all honestly these things may or may not simmer for years before causing an eruption or major problem. Who realy knows.

So the reality is imo that after this very short term focus on doom and gloom, the market is going to realise the value its currently giving away and we will see a sustained run again.

One only has to look at the fundamental intrinsic values of Australian companies to see we are over sold. All 4 banks are under value ranging from 13.3% for WBC to 23.7% for NAB. JBH is 37% under value, BHP 29% under value, woolworths 25%.

In terms of resource stocks and particularly the small caps imo the risk aversion triggered in the last 3 weeks and from Japan has many of them even more over sold.
In Hogs case its almost 20% in a week and for what reason.

I think this arvo many buyers started to realised the value on offer.

Hence why im buying. Enjoy the ride, but personally i find it better to be doing the opposite to the Lemmings. And when they are all buying i will sell them back to them for premium prices.

Important update

http://cheezdailysquee.files.wordpress.com/2011/03/90d76766-a7c7-4d86-8bfa-eda36f5d8c97.jpg

The email from HOG is pretty on par with the forecast if I read correctly.

The $4 million revenue is for Feb and March from the 6mm chock, They will be aiming around $8 million revenue from the 9mm chock for April and May and maybe slightly higher.

If you get your calculator out it adds up to close to $50 million revenue per year (they have said $45 million from the first well alone).

The second well will aim to double revenue later in the year pushing to $100 million revenue a year.

There is not much really to worry about with the company operating in the Ukraine with what is happening in the Arabic world. Contracts will be set up with the Ukraine government to deliver locally.

There is also an upside for the Ukraine to look at more gas and oil energy as opposed to a high dependence on nuclear.

Wouldn't mind trying to get in with a 40 cent buy trough, but have a feeling it may be hard in the next week with how quickly it bounces, but only time will tell.

Seems there was a reason for the delay in production look at note 6 in the half yearly report, a bit of poor form from the company that they didn't highlihgt this issue. Appears like the drill rig operators were holding the companies well to ransom for 625k, it appears they got paid 212.5k instead when the court ordered the rig operators to hand over the well.
The sums of money are insiginificant but for a company that seems to be quite good at communication, its not good that they didn't explain this before.

suhm said:

Seems there was a reason for the delay in production look at note 6 in the half yearly report, a bit of poor form from the company that they didn't highlihgt this issue. Appears like the drill rig operators were holding the companies well to ransom for 625k, it appears they got paid 212.5k instead when the court ordered the rig operators to hand over the well.
The sums of money are insiginificant but for a company that seems to be quite good at communication, its not good that they didn't explain this before.

Click to expand...

You wouldn't want to highlight that your oil drillers were trying to do you over. Probably one of the perils of working in a totally commercial marketplace. Perhaps this has something to do with with what seems to be very long drilling times for the wells.

Lets look forward to lots of luverly iron ore coming from the 9mm choke.: And hopefully a quick no problems drill for the rest of the field.

Perhaps we should drop the "iron ore" gags. Someone viewing this thread for the first time, is going to be TOTALLY confused by the musings going on. :

Ugly day on the market and unless Superman can make a return and spin the world back by a few days it won't get better.

I thought HOG's behaviour was curious. It got butchered along with everything else and then.. lo and behold...two small sales in the last seconds take it from .38.5 to 40c. Nice piece of window dressing I think.

Happily buying at these prices.

Cant see this lasting too long.

The heat in those reactors, will soon be gone in a few more days and the market will imo realise its over reaction and bounce. , finishing the headlines of radiation leaks.

If it works its way back up to 50c thats a 25%+ gain on these prices.

condog said:

Happily buying at these prices.

Cant see this lasting too long.

The heat in those reactors, will soon be gone in a few more days and the market will imo realise its over reaction and bounce. , finishing the headlines of radiation leaks.

If it works its way back up to 50c thats a 25%+ gain on these prices.

Click to expand...

Sounding a bit like Superman there Coondog. IF, (if,if,if) the gods come together and everyone holds their breath properly the disintegrating nuclear power stations will slowly subside without poisoning a few million people and making large areas of Jan uninhabitable for years to come. (It could quite conceivably get that bad )

And after that "all" Japan has to be concerned about is a series of totally destroyed communities, upwards of 10,000 people dead, hundreds of thousands of people without homes or anywhere to live, a crippled power system that will restrict the whole production system and the possible failure of at least one of their biggest companies (Tokyo Electric power company) - and that is the optimistic view.

I don't doubt the intrinsic value of HOG. But sometimes external forces can make a complete shambles of even the best businesses.

doubled my holdings in HOG yesterday at 0.40.

hopefully market sentiment is a lot different in the second half of the year.

dumadiscount said:

doubled my holdings in HOG yesterday at 0.40.

hopefully market sentiment is a lot different in the second half of the year.

Click to expand...

.38.... should have waited a few hours... ill be buying but not just yet! the Knife will still fall for a few more weeks.

The others hve bounced 5%, wont be long hog will imo

condog said:

The others hve bounced 5%, wont be long hog will imo

Click to expand...

Trippled my holdings in the last two days, hmmm nice thank you.

in reference to the superman tag, not sure what you been smoking, but you could probably sell it for a quid.

In reference to the hold up in drilling. The good thing is we won the court case, which highlights even if the drillers are a tad dodgey, the courts are clearly operating in the correct manner. And at the end of the day if the courts are going to uphold these contracts, then the drillers will behave.

I doubled up yesterday, as well, and still have ammo left.
With the shocking memory of Chernobyl being refreshed in everyone's mind, it's hard to imagine that the natural gas price in Ukraine could go anywhere but up.

Trippled my holdings in the last two days, hmmm nice thank you.

in reference to the superman tag, not sure what you been smoking, but you could probably sell it for a quid. Coondog

Click to expand...

Well done ! Certainly seems unlikely you will get HOG at this price in the future.

The superman reference? I was referring to the movie where Superman spins the earth backwards to restore it before a catastrophe. I was pointing out that I don't believe Japan will simply pull out of this disaster easily and quickly and that the nuclear implications of a leaking power station in particular are still quite dangerous.

The power stations are not secure and the consequences of further contamination and panic in the population, the economy and the share market are still real.

While I agree with you somewhat basilio, it really does depend on what time horizons your looking at. The news will continue to be flooded with Japan tragedy and nuclear catastrophe stories for at least a couple of weeks longer if not more. But if you look at a time horizon of 4-8 months time or longer then i think you'll see this current volatility and drop as a buying opportunity.

Japan are going to need/want to rebuild and they are going to require the materials to do it. This will underpin the recovery story of the australian market and in turn help money flow back into HOG. I mean look at the recent sell off in HOG and it is almost in no way directly related to Japan's tragedy. So even if Japan takes its time to rebuild, they will need australian resources, and while indirectly related to HOG, risk appetite will return and hence HOG should appreciate.

Not to mention fast forward 4-8-12 months and we should have another 1-2 wells online and fingers crossed producing decent flows. If only I had the funds to triple my holding like condog has, because i think this recent drop will be seen as a great buying opportunity particularly for HOG if we look back in 12 months time.

That was some surge between 10am and 11am today, close to 10% in an hour.

Then stabilised for rest of day with not much volumes. To me this would mean people are assessing the stock a bit more closely because it does have potential.

Looks up trend to me, as it may have reached a low trough, but only time will tell.

I would have the buy tick, take it all leave it but fundamentals have it a lot more than around 40 cents at the moment.

Another interesting story which I can't find information about and trying tonight is how far ahead they have hedged and fixed price sales and if this has been done for March / April.

Bigger companies will fix for longer to avert risk.

This could be a big benefit for HOG in the next few months.

Anyone agree, disagree, have the information, or can expand on this more?

traderclaude said:

Another interesting story which I can't find information about and trying tonight is how far ahead they have hedged and fixed price sales and if this has been done for March / April.

Bigger companies will fix for longer to avert risk.

This could be a big benefit for HOG in the next few months.

Anyone agree, disagree, have the information, or can expand on this more?

Click to expand...

Not sure that they can hedge in the Ukraine. Theres probably no futures market operating thier. They can only hedge if the buyer is willing to buy contracts in advance, or if thier is a market for futures, which i dont think thier is in the Ukraine. Happy to be proven wrong if anyone knows otherwise.

The EU has gas futures and i know they are affected by Russian / Ukraine gas disputes, but as far as i know HOG would not be selling to the EU. They could be, but i havent read it anywhere. If they are selling to the EU, then potentially they can hedge.