Sdx Energy Share Discussion Threads

[homebrewruss] 04/1/2019 09:57

Thanks tournesol.
What if they are/were throwing off loads of cash though as well as having a low p/e and all still have plenty of resource eg. RRE which has a p/e around 1 and is therefore now generating it's own market cap in cash every year?

[tournesol] 04/1/2019 09:50

small holding

We are discussing whether P/E has any predictive value to help identify pricing anomalies and likely future price movements and to provide a basis for comparing and contrasting different companies.

Your example does not speak to that. It is an exercise in retrospection.

What I am trying to get at is that an E&P company with a P/E of X is not not necessarily twice as good at value generation as a second co with a P/E of 2X, and the relative valuation of the two has no correlation at all with their respective P/E ratios.

Look at PMG and HUR. HUR has no revenue at all because it has not started producing. It does have a gigantic project about to start proof of concept testing. PMG has a tiny amount of production but a decent sized project in gestation. The two companies are chalk and cheese. SDX has more production than either but is in a very very different situation. Would it help us to compare and contrast the P/E ratios of these three totally different companies, which are following radically different strategies in very different regions? No. Not even a little bit. I am invested in all 3 and know them moderately well. I would not be able to derive any useful intelligence whatsoever from their P/E ratios.

Using the P/E ratio to value an E&P is like using a hammer to tell you which ice cream tastes best. It is the wrong tool.

But hey, if you want to use it, then be my guest.

T

[small_holding] 04/1/2019 09:32

tournesol - "The P/E ratio simply tells you how fast they are depleting their limited reserves and how soon they will be worth zero."
That is just plain wrong
If SDX doubles in value today, tomorrow the reserves are virtually the same, the rate at which they are depleting those reserves doesn't change yet the P/E will have risen significantly.

[tournesol] 04/1/2019 09:22

Imagine 2 E&P's

They both have 100 million bbls of reserves

One of them is producing 5 million bbls a year in a politically secure, low tax environment. They have a history of upgrading their reserve base and have several million bbls of 3P reserves which might get upgraded into 2P and a lot of resources which might get upgraded to reserves.

The other is producing 10 million bbls a year in northern Iraq in a Kurdish controlled area about to be attacked by Turkey. They have a history of downgrading their reserves into resources and of reducing the size of the reserves/resources base. Their receipts from the government are unreliable and receivables outstanding are growing.

What would a comparison of P/E ratios tell you about their relative merits?

[tournesol] 04/1/2019 09:15

Rosannan

of course its simplistic

P/E is a simplistic metric

it has nothing whatsoever to tell us about the valuation of E&P companies

in fact less than nothing because it muddies the water and confuses those who use it perfectly well in other sectors of the market.

[the drewster] 04/1/2019 08:50

tournesol - despite spending my working life in IT, I am a qualified accountant ... the point I was trying to make (clearly badly) is that SDX could easily generate their entire market cap in earnings in 2019.

[tournesol] 04/1/2019 08:28

Drewster

P/E ratio is not a metric that can ever be applied to any resource extraction company - oil or mining.

When a retailer or a manufacturer does its thing it converts stock/raw material into sales and thereby adds value. All being equal it can keep doing that for a thousand years. Its P/E ratio indicates the efficiency of its wealth generation.

When oil/mining companies monetise their reserves they are simply converting finite and irreplaceable mineral resources (which have a defined value) into cash (which has the same value). Once they finish doing that they have nothing left. The P/E ratio simply tells you how fast they are depleting their limited reserves and how soon they will be worth zero. It tells you nothing about their wealth generation.

To measure the value of such companies you need to concentrate on their reserves/resources and on the cost/efficiency with which they are acquired/found/exploited. The P/E ratio does not measure any of those things.

[the drewster] 04/1/2019 08:11

PE for 2018 must be less than 2 extrapolating Q3 rns, and assuming no political nightmares getting South disouq approvals, 2019 will smash 2018. There is huge potential upside here.

[ifthecapfits] 04/1/2019 08:08

to match canada?

[daler1966] 04/1/2019 08:06

No trades and up 5.4% ?

[potential] 03/1/2019 18:29

I stuck to my guns pal and righty so!! Many intellects amongst us bought in at the ridiculously low share price and will be thanking me when we hit 72p again- you might want to keep a record of this message too and bring it to the table when we're closer to my figures pal :-) 2019 will be transformational for SDX and I don't shy away from saying so! Happy new year to you all -)

[haideralifool] 03/1/2019 16:33

The vol today was 350k, the average daily vol in the last year was 580k, so just seems like a quiet day when someone has decided to get some.

[ifthecapfits] 03/1/2019 16:31

It was - but not right away. Took a day or two from memory.

[plentymorefish] 03/1/2019 16:22

More likely some shorts closing and/or bottom feeders than any rumour. Last time there was a rumour, the share was suspended

[plentymorefish] 03/1/2019 16:06

Well this is what that poster said on the 29/8/18:

"Been investing for over 15 years and I must say this company as all the hallmarks to deliver and beyond, plus their management is one of the best I've seen for along time.... I'm not selling a single share as sdx will be double of what it is today by year end!!!"

He was half right as the share price did move by half, but unfortunately it went the wrong way!

;)

[thegreatgeraldo] 03/1/2019 16:01

Guessing we're not talking Fleetwood Mac here?

[tournesol] 03/1/2019 15:55

what rumours?

[ifthecapfits] 03/1/2019 15:54

Where did you hear those rumors?

[potential] 03/1/2019 15:49

Rumours of BP about to steer again - get in whilst you can ad this time it's going to happen :) GL All

[small_holding] 01/1/2019 07:33

Anyone wondering why our Directors are not buying shares at this low level may want to look at the Long Term Incentive Plan (LTIP) introduced 31 July 2017.
Under this scheme Paul Welch was awarded 770,500 shares in 2017 and 732,337 shares in March 2018. Mark Reid was awarded 555,555 shares in 2017 and 561,798 shares in March 2018.
These are not options that can only be exercised at a predetermined price, these are awards that only have to be held for 5 years. There are “stretching strategic, operational, financial and shareholder performance criteria that must be met for the LTIP’s to vest” but I can’t find out exactly what these criteria are. As shareholders we have seen the share price drop 36% this year and South Disouq was not delivered as promised. Whilst we have suffered financially they have seen a bonus equivalent to 100% of their salaries. Why don’t the directors buy shares? They don’t have to.
This LTIP is voted in every AGM and I for one intend voting against it. A purely share priced based bonus scheme would surely better focus the minds of PW and MR.

[tombul] 20/12/2018 04:44

Brave and honest.

[darola] 19/12/2018 18:09

I’m loading up in LVCG.

[john henry] 19/12/2018 17:34

Darola where do you see better value, certainly not in the O&G sector.

[shakeypremis] 19/12/2018 17:25

At $10/mscf and 10mmscf/d, SDX nets about US$26m in profits from Morocco... jus sayin...