SSN 0.00% 1.5¢ samson oil & gas limited

Hi Cmon, V_H & all, All these stocks have risk, for me that is a...

  1. 1,593 Posts.
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    Hi Cmon, V_H & all,

    All these stocks have risk, for me that is a given. A reason why I consider the report is good is that many of those risks are clearly stated as are mgts views on those risks. SSN holders are given much more info than most to form their opinion and that assists individuals in managing their personal risk.

    Some points where I think we differ:
    1/ The report tells us that had the hedging been realized the covenants may have been met. That to me is a timing issue and manageable in the future with the future hedging in place and stable production. I agree the points you make have merit and I am not disputing what is reported or saying this is not an important consideration.

    I don't think the production has become more gassy. What I think has happened is much less gas has been flared and due to this limit by decreasing the gas flared it restricts to oil flow therefore the ratio of gas sales to oil sales increases. By my calcs from ND report I have June qtr flaring at 59% gas produced whereas Sept qtr was 15%. This is good for meeting flaring rules and sustainability. I think if more gas can be processed and sold then more oil could be produced, that is totally my opinion only and this distinction effects all the drivers which ultimately effect the amount of cash that can be generated. Unless we individually have formed a view on capacity and reconciled that view to actual well results then the numbers and how mgt are operating may not be representative of the underlying assets.

    2/ There are always many options, one is do nothing and sit tight, manage discretionary spending and optimizing the hedges in place to meet the required hurdles. If the wells are capable of producing more then volume could be increased because the pure price less production cost (loe & taxes only) is positive however this gives lower s/h return as the current margins are small. The more oil left in the ground at these prices the better for the longer term but I accept this logic is contrary to what most people value.

    There is a lot more to your OP but will stop here for now as these take me a while to gather my thoughts and reply. I make this stuff up and am no expert, I enjoy discussing these issues and considering implications and greatly appreciate the feedback you & others have always given. These are only my views and I believe that the points you make are important. Had the covenants not been breached again we would be having a different discussion so it is prudent to consider all possibilities and implications imo.
    Cheers
 
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