On the commercial side, Sikorsky finished the year with a backlog of nearly $3 billion — its largest ever — driven by growing demand for offshore transportation in the oil and gas industry.
Monday, December 15, 2014
Friday, December 5, 2014
This is a blog post first published in March 2011 discusses - for the benefit of shareholders - who has been making the major capital decisions for them.
Kruise Kemp is no stranger to the courthouses of northeastern Montana. The land manager for Minnesota-based Northern Oil & Gas said there are several buzzing with the land men just like Richland County's.
Many of those speculators are looking to "top lease," meaning their sniffing out existing oil leases that are just about to expire in hopes of swooping in to strike up a new deal just as the clock runs out.
In these parts, Montanans, some with leases that went untapped, have looked in envy toward North Dakota where drilling rigs have cropped up like knapweed the last couple years. There are 138 rigs punching holes through the shale in North Dakota. Here, there is only a handful.
Kemp said the state of North Dakota had provided oil companies with a wealth of services including online field data that made it easy to setup. And drilling rigs attract other drilling rigs. It's a safe assumption when you see other rigs active in your area that you're going to hit something. Having so many rigs drilling in one area puts pressure on companies to permit as many wells as possible before moving on.
But now companies are turning to Montana to further define the productive area of the Bakken. Working with two other companies, Northern launched a new 3,000-acre project in Richland County this month and has two others nearby.
Wednesday, December 3, 2014
I have been short this stock for some years and my view is that absent sustained high oil prices this company will file bankruptcy.
I also follow the Twitter account of Michael Reger - the company's CEO.
And he has been continuously retweeting this or variants on it:
In another tweet he says that "$NOG has the most capex flexibility in the Williston. Oh, and we're hedged at ~$90."
Lets check this out. Northern Oil and Gas does have almost 6 million barrels of oil hedged at prices that are $20 in the money - roughly $120 million.
This is against $736 million (at last balance sheet) of long term debt. The hedges are not in the money by 25 percent of market cap - well not really - because the debt holders have first claim. The hedges are in the money by less than 20 percent of the company's debt.
The hedges will thus repay 20 percent of the company's debt.
The company will need to pay the rest by itself from rapidly diminishing cash flows.
Michael - please correct your tweet accordingly.
Moreover Michael pleads capital flexibility. Even that is not obvious. The debt covenants require that the company has a current ratio of 1:1. Currently the company is not close to that covenant. The shortfall (more than 120 million) likely gets subtracted from the available line.
The current ratio short-fall seems to be about the same as the hedge gains. I guess that means they can pay their current liability short fall with hedge gains...
The strange current ratio
Last quarter revenue was about $120 million. Revenue is likely to fall net of hedges.
They have current accounts payable of $220 million.
You may wonder how you possibly have accounts payable of almost twice quarterly revenue (and eight times cost of goods sold).
I will let you work that out.
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