Market's view on Southern Energy
Published on April 2024
- Stock watchers noted the absence of trades, suggesting that many may have already sold their shares.
- A stock watcher mocked the company’s “Disciplined growth strategy,” implying skepticism about its effectiveness.
- Concerns were raised about a significant write-off amounting to $38m.
- Discussions highlighted poor EPS figures, exacerbated by disappointing performance in the US despite low gas prices and hedging efforts.
- Stock watchers criticized a $75m capital expenditure over two years, which only increased production by 100 boepd, while 400 boepd were acquired for $3m.
- Alarm was raised over the company’s financial health, noting a total debt of $26m with a high-interest rate and impending debenture repayments, alongside criticism of the decision to invest further in unproven reservoirs.
- Stock watchers expressed concerns about potential new cash raises, recalling previous instances where raised funds were not used as expected.
- Stock watchers are speculating about upcoming financial results and are particularly interested in net debt and working capital.
- Concerns were voiced about the company’s financial sustainability, with one stock watcher highlighting the company’s declining production and revenue from new wells not covering costs.
- A stock watcher expressed optimism for North American gas prices, suggesting that production caps could lead to price increases, benefiting the company if they manage their resources well.
- Historical production cuts by large U.S. producers were discussed as a potential support for higher future gas prices.
- Stock watchers scrutinized hedging strategies and regional gas price disparities, noting the impact on company earnings.
- Concerns about the company’s ability to generate sufficient cash flow to maintain operations, with a stock watcher calling it a “zombie company” due to its inability to cover costs and generate profit.