Uncut Diamond in the Northern Utica; Halcon

I think understanding the motivation of companies goes a long way in understanding their activities.

So it is with Halcon; and I think the attached link to an article gives a better perspective of the motivations of this company. For me it also gave an insight as to whether or not they will return to the Utica (which I believe they will, just not sure when). Here is a paragraph from the article:

  

    "The share price has fallen almost 60% since July for reasons that may or may not prove to be valid. First, the price has likely fallen in part due to the Utica/Point Pleasant and Woodbine writedowns that took place during the 2013 fiscal year. However, I suspect the consequences of these write downs are exaggerated in the eyes of the investing public. This observation is based, in part, on comments made in previous Seeking Alpha posts by other investors. They appear to think Halcon's Utica acreage as a whole has been written down, which is not true. Only some of the acreage on the Pennsylvania side of the Utica position has been written down. The Ohio side of the , where Halcon still has hundreds of potential , still appears to be viable, and further is backed by some good production results"

http://seekingalpha.com/article/2614925-halcon-resources-undervalue...

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Permalink Reply by Alan Bowers on October 30, 2014 at 8:50pm

There was an article on MSN Money today from Reuters and written By David Randall (6 hrs ago), the title of the article is:

Oil price declines have small-cap shale investors scrambling

That may have some insight on Halcon Resources...

http://www.msn.com/en-us/money/savingandinvesting/oil-price-decline...

Shares of Halcon Resource Corp, a $1.2 billion market cap company which produces oil and natural gas primarily in Texas and North Dakota, for example, have fallen 48 percent over the last three months. The company's shares, which traded at approximately $3.10 late Wednesday, could fall below $1 if oil falls below $75 a barrel, largely because those lower prices would result in a funding gap of $614 million for its 2015 fiscal year, according to Goldman Sachs estimates. The company did not respond to a request for comment.

The article also points out that there are several Fund Managers actively buying up stock in these smaller O & G companies because they think the price of a barrel of oil is going back up soon.

If Halcon stock drops to $1/share I think they are going to have an new owner very shortly.

 

Permalink Reply by Barry D on October 30, 2014 at 9:43pm

Alan,

As the author of the article I posted says, Halcon may be undervalued and worth buying.

His feeling is that it is selling at about half of it's true value.

He may be correct, oil prices will probably rise and thus the price of the stock.

Another thought, if oil prices remain depressed and gas prices remain stable or increase we may see Halcon return to Ohio and PA.

Who knows ?

Permalink Reply by Barry D on November 1, 2014 at 8:55pm

The situation of stable to increasing gas prices may bring in new players.

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