SEA - Sundance Energy Australia

[Sdajii]

This is typical. SEA floundering around 30c so I picked it for Feb thinking 'it's gotta at least gain something from here!'

And it did, up 16%! Problem is it did that on Dec 31st, now 36c

grrrrr....

Oi! I'm getting it for February! Your claim is premature

I still think you're going to go well in January and I will do well in February and I expect to be holding until mid year and smiling at over a dollar with oil at US$100 (and to those weirdos among us, no, I'm not claiming it will stop at $100 and I'm not claiming to know exactly how high it will go).

 

[Parse]

Sorry, typo, that was supposed to be Jan.

I think it will hit around $70 this year. That's the POO not SEA

 

[Sdajii]

Sorry, typo, that was supposed to be Jan.

I think it will hit around $70 this year. That's the POO not SEA

$100 in H1 2019 $1 (SEA) H1 2019

More sure about POO than SEA, but it's difficult to imagine SEA not hitting a hundred Aussie cents if POO is a hundred American dollars.

 

[Sdajii]

Looks like you're likely to win the January tipping contest with SEA, Parse (I expected SEA to win, still kicking myself for being slack and letting you get it! Haha!). I saw Joe's February post within a minute of him putting it up and jumped right on it this time! I won't be surprised if I get first prize in February after you get it in January.

Everything is looking good, I'm still super bullish on oil over the next 5-6 months, and while SEA has already jumped up 50% from its recent lows, it's still undervalued relative to the current price of oil not to mention the fact that oil is in an uptrend (and if I'm right, that's going to continue). Given the lag in SEA's price recovery given the POO recovery, SEA is really shaping up for some good gains in the near future. I can't remember the last time I was this confident about a stock in the short to mid term. It's already my largest holding but I'm considering selling some other stock to buy more SEA, and if I have some more funds come my way soon enough I'll be buying more.

 

[Parse]

I am confident as well, but not as confident as I would like. I was once expecting SEA to surpass the $1 mark first half of this year, but now I am not so sure about anything over 80c. Of interest is that the POO fell overnight yet SNDE went up. I see the SNDE price as a major factor for SEA now.

However I am still optimistic once this China trade war thing and US shutdown thing are over (no matter what happens) POO/SEA will be on the up.

 

[Sdajii]

And indeed, nearly a month later, oil is up, and looking like continuing. SEA's price is lagging (gave me a chance to top up!) but it should catch up soon. I think SEA is still lacking a bit of love since dropping back the drilling plans, but with oil looking up they may change that which would give us a real kick, and even without it, we're clearly undervalued now and set for a nice run. I think the technicals are currently holding us back, which started with the drop in oil price and subsequent cut back on drilling plans, but this is all temporary stuff, giving a temporary low share price. Brilliant buying opportunity. I feel a bit bad, talking about SEA makes me feel like a shameless ramper, but I do think we're going to see at least a 100% gain from here in under 6 months. Part of that is because I'm very bullish on oil, and if you were to forecast oil to sit stable or only make modest gains over the next 6 months, then 100% is probably right out of the question, but even in that scenario I think you'd do very well.

 

[Parse]

I think SEA will win the March tipping comp for you, I can't see it being under 50c at the end of March (guess I just gave it the kiss of death?).

I have been following SNDE a bit and trying to figure out whats driving the market price there. But I see very little news or talk on SNDE and thus I feel like a mushroom in the dark on this subject. It's fairly obvious SEA follows SNDE like a lost puppy, I just can't see whats leading SNDE. It doesn't appear to be the POO.

 

[Sdajii]

I think SEA has a strong chance of winning March, the potential issues are that its (IMO) inevitable run begins before the end of February and doesn't really kick off heavily in March, continuing into April. And of course some other speccy may get 150% or something, you never know. The competition is literally just fun and games though, and as a holder I'm mostly interested in SEA increasing overall, regardless of how that coincides with calendar months and speccies which happen to be chosen in the competition. Reasonably confident I'll at least place in March though, and expecting I'll probably still be in the red at the end of February, though I certainly wouldn't be surprised to edge into the green.

All things considered, it's easy to imagine someone is holding the SEA price down and a takeover is coming. While that would give me some quick profit I'd really hate it to happen, and it wouldn't be the first time I've been 'robbed' of most of the potential profit on oil company takeovers. If someone wanted to right now they'd probably be able to get SEA for under 80c, but I really think we'll be over $1 within six months (again, this assumes the POO does what I expect, and we certainly wouldn't get it in six months on less than $60 WTI)

 

[Sdajii]

Looks like March isn't going to be SEA's month, although I do think we'll probably end the month a little up rather than a little down. I chose SEA again for April (which will come as a surprise to no one!), for similar reasons. It's leveraged to the price of oil which I'm bullish on (as I've said in the oil price thread since back into last year, I predicted it would drop below $52 which it did and then rise up to over $100 before the end of Q3 2019, and it's currently on the way up. The price of oil is an external topic to SEA of course.

The share price hasn't been doing well for the last couple of months partly because the price of oil took a tumble and hurt the sector's sentiment (par of why I wanted to be accumulating at the time) and partly because admittedly, while SEA's management are great deal makers, they are pretty lousy managers of oil projects. This has resulted in SEA being very undervalued in terms of its assets, and considering the less than brilliant management it's understandable. If it gets too bad we'll just get taken over (and hey, I'd make a handy profit from that anyway), but if oil does anything like what I think it will, SEA won't be able to avoid holders getting multibaggers from this point.

 

[Sdajii]

WTI continues its rally while SEA lags in share price, despite making good fundamental progress. I think May is going to be good for SEA. I realise I have been saying that for a while without it happening, but the longer it takes for the share price to move while the company fundamentals and the price of oil increase, the further up we seem destined to go.

Concerns at the moment revolve around a bottleneck in production capacity (it's nice to have produced more than expected and for this to be causing a problem, but the market seems to only say 'management is crap' rather than 'wow, nice production'). This should be resolved this week if I have the timeline correct. Apparently work commenced April 15 and was supposed to take 4-5 days. If they're working over Easter it should be complete about now with a nice announcement on Tuesday, and if not it should be later in the week.

Production is exceeding predictions, and based on those predictions at a much lower oil price ($55 vs the current $64) brokers had price targets of multiples of our current one.

Interestingly, earlier this month a clear ascending triangle pattern began, and just before it broke out, a sudden pile of sales prevented it (if those sellers simply held off rather than dumping hard, they'd have been able to sell at a higher price). Then on Thursday a rally began, and just before 43.5c was broken through, a massive 990,000 sell order at 43.5c went up, predictably spooking the market and preventing the price from going higher (no more sold at 43.5c, predictably that 'seller' didn't sell any). And in the auction the price was aggressively pushed down at the last minute to below the MA price, no doubt driving away the technical analysts. I'm certainly hoping it's accumulation rather than a takeover setup as I'd hate to be robbed by another one of those, but I suppose even if it's a takeover, a smaller profit is better than nothing.

I'm not quite as bullish on oil as before, but still expecting WTI in the mid 80s this quarter, which should comfortably get SEA well over $1. WTI at $65 should start things moving, WTI at $70 should really pick the pace up, and it seems like that will happen at a time when SEA has a few bits of good news (production seems on track to further exceed guidance). I think May and June will be great months for SEA.

 

[Smurf1976]

I'm not aware of any obvious reasons but it's up over 13% on Tuesday.

 

[Sdajii]

I'm not aware of any obvious reasons but it's up over 13% on Tuesday.

It is heavily undervalued (I know that's a painful cliche, but it really is) and the oil price rally brought attention to it. I am confident that will continue into the week and probably next week too. Tuesday's SEA rally should have it on people's radars tonight and hopefully buying interest will outweigh profit takers tomorrow, but either way I'm confident we'll finish this week above where Tuesday's rally left off.

 

[peter2]

I agree with Sdajii. There was a break out in BPT, STO today also. WPL, OSH jumped up.

 

[qldfrog]

But i bought in yesterday so it will fall
Sorry guys..

 

[Smurf1976]

But i bought in yesterday so it will fall
Sorry guys..

OK so far.

 

[barney]

But i bought in yesterday so it will fall
Sorry guys..

Reverse psychology worked like a charm ….. Going like a rocket

 

[Sdajii]

Sdaji picked it again for June!

As a shareholder, May is shaping up to be a pretty bad month for SEA, although as someone tipping it for June in the competition things are looking fantastic! Haha! The crash in oil price has not surprisingly hurt SEA's share price, but I am very bullish on oil in June. I suppose I've been saying I'm bullish on oil every month this year, but hey, for the most part that has turned out to be justified (if anyone is interested, I posted a bit about my thoughts about POO in the near future in the oil price discussion and analysis thread).

SEA is still in much the same situation it has been in for the last few months. Clearly undervalued if oil prices remain in the vicinity of where they are, even if there is a short or medium term fall (SEA is heavily hedged on oil price so very resilient to short term drops) but the sentiment is poor due to heavy debt (which SEA will comfortably deal with once it goes cash flow positive which it soon will unless oil prices absolutely collapse and stay low long term, or if there is a severe internal disaster).

High debt and lack of confidence in the oil price, despite heavy hedging, is pretty clearly holding the share price down. The two things I think will increase the share price in the near future are the POO improving, and even if that doesn't happen, the company turning cashflow positive and reducing debt, which I'm sure the market will respond positively to. Cashflow positive probably won't be something we'll see in June, but hopefully as it gets closer and more obvious on the horizon the market will respond. For the sake of my tip in the competition, let's hope the market doesn't notice until June 3.

 

[Miner]

Sdaji picked it again for June!

As a shareholder, May is shaping up to be a pretty bad month for SEA, although as someone tipping it for June in the competition things are looking fantastic! Haha! The crash in oil price has not surprisingly hurt SEA's share price, but I am very bullish on oil in June. I suppose I've been saying I'm bullish on oil every month this year, but hey, for the most part that has turned out to be justified (if anyone is interested, I posted a bit about my thoughts about POO in the near future in the oil price discussion and analysis thread).

SEA is still in much the same situation it has been in for the last few months. Clearly undervalued if oil prices remain in the vicinity of where they are, even if there is a short or medium term fall (SEA is heavily hedged on oil price so very resilient to short term drops) but the sentiment is poor due to heavy debt (which SEA will comfortably deal with once it goes cash flow positive which it soon will unless oil prices absolutely collapse and stay low long term, or if there is a severe internal disaster).

High debt and lack of confidence in the oil price, despite heavy hedging, is pretty clearly holding the share price down. The two things I think will increase the share price in the near future are the POO improving, and even if that doesn't happen, the company turning cashflow positive and reducing debt, which I'm sure the market will respond positively to. Cashflow positive probably won't be something we'll see in June, but hopefully as it gets closer and more obvious on the horizon the market will respond. For the sake of my tip in the competition, let's hope the market doesn't notice until June 3.

Well said. How is cash situation for Sundance ?

 

[Sdajii]

Well said. How is cash situation for Sundance ?

Looking pretty good. A lot of debt which is possibly the single biggest thing hurting sentiment and causing it to be so fundamentally undervalued. The other main one is doubt about the price of oil, and these obviously go hand in hand - if the future oil price was guaranteed to stay where it is now nothing other than an internal disaster would prevent the company from being valued at multiples of the current level, but debt exacerbates the risks of a lower oil price. However, with all the hedging in place there's no need for a capital raising before they will be cashflow positive (if oil prices stay low long term the hedging will phase out over time of course), they're getting close to positive cashflow and once that line is passed they can start reducing the debt.

Most broker price targets have been done with an assumption of WTI at $55 and have figures around $1.20-$1.60, around 3-4 times the current price with the assumption of oil lower than where it is now. Anything over $1 would make me pretty happy.

 

[Sdajii]

Well, after May wasn't exactly a good month for SEA, June has been just hideous! Having said that, we seem to have turned the corner.

Folks have been talking down shale, the price of oil is (was?) down, tax time selling kicked in and smacked SEA hard, it has been the perfect storm, very nasty. However, the fundamentals of SEA are still looking great. The POO was down, but SEA is heavily hedged and was still making good money, more than guidance, even when oil was at its lows this month. With WTI oil at guidance price of $55 most analysts value the company around a dollar, and we've continued to do better than that, yet the price dropped to around 20c! With the rebound in POO, SEA has begun the recover too, and I expect we'll see some good movement over the next 6 weeks.

This will be the last week of tax loss selling, perhaps we'll see a bit of it in early July, but then that issue should be over. POO is on the way up with tensions in the middle east continuing to rise, Trump told Iran not to disrespect him again or it will be the end of Iran, and they then say Trump isn't worth exchanging messages with because he just doesn't deserve that much respect, then they shoot down a US drone. I must admit, I got my POO prediction for H1 2019 very wrong (unless we see something astonishing in the next week or so), but still, what I was expecting looks like it might play out, just slightly later. For a very long time, if a war has started towards the end of a US President's first term, he has won a second term. Perhaps not surprisingly, wars tended to start more often towards the end of first terms. Trump has been trying to pick a fight with Iran as we get later into his first term. We'll see what unfolds.

As for SEA specifically, the bottom line is looking excellent, they have exceeded guidance in terms of prices, and presumably net profits. They should be cashlow positive ahead of schedule, so the next quarterly (due next month, most likely we'll get it near the end) should look great and give us a nice boost. I chose SEA in the monthly competition (again!) and for that sake I hope they release the quarterly on the 30th rather than the 31st! (or early on the 31st). Even so, I think the market will expect it to be good and we should get positive movement towards the end of the month.