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Opinions Greg Newman
Husky EnergyHSE.TOCOMMENTNov 05, 2015
Greg NewmanUnknown
$19.36
Stock price when the opinion was issued
$6.76
As of Jan 05, 2021. Market Open.
oilgas
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COMMENT
ATH vs HSE vs MEG? The clear stand out is MEG, who is 55% hedged at $59 oil prices. ATH has a high cost project with Hangingstone and is burning cash, although they have enough liquidity for the next 9 months. He would never own HSE, because of their ESG issues. All bets are off for all of them if $25 oil prices remain in 2021.
Eric NuttallUnknown
oilgas
COMMENT
They announced a $1-billion spending cutback. Their cash flow is right on their dividend, so they could cut the dividend and use that cash to lower their debt. Cash flow is tight with this low oil price. They could endure Q2 without cutting the dividend and cash flow improves along with the oil price. The upstream side will have less cash flow, but downstream could be much more profitable if people return to driving.
oilgas
DON'T BUY
It has been a very difficult share to own for investors. Right now they are in defense mode again as oil prices have fallen recently. He expects a proactive cut in production out of OPEC however. Creditors are putting clamps on further US shale production currently, so he feels there is a road to better times ahead. He thinks there are better investments than Husky out there though.
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PAST TOP PICK
(A Top Pick Dec 24/19, Down 18%) He has liked HSE for its higher highs and higher lows. Now, he doesn't like that it's breaking down to its support level. If it falls below $8, then get out.
Javed MirzaOwned
oilgas
HOLD
Down and out? Remember there is a nice dividend ($0.50 annually and a yield over 5%). The skepticism is in how are they going to grow the business. The balance sheet is in fine shape -- debt of only $4.6 billion and they are sitting on over $2 billion in cash. The key is with production, can they start growing it? Will be East Coast Canada, China, etc? When WTI was around $66 the share price traded over $20. If you own it stay with it.
oilgas
TOP PICK
Hold for a year or so. We're in a secular bear market for commodities, but we're heading into year two of a four-year cycle. Year three is strong for energy (2021). So, HSE is poised to rise. He expects this to move above $12 to $16, and possibly higher in 2021. Resistance is $13-14, the upside target. (Analysts’ price target is $11.39)
Javed MirzaOwned
oilgas
BUY ON WEAKNESS
It is totally out of favour. People are concerned about egress and growth. Debt went up to 23%. But they are sitting on a lot of cash. The balance sheet is good. This one has been devastated in the last years. The projects they are adding aren't sexy enough for investors. Buy during tax loss selling.
oilgas
Have changed their dividend to equity, which is one reason for the big selloff. They also wrote down some assets. They are more sustainable now. The balance sheet debt to cash flow is 2X for 2015, and 1.7X for next year given his assumption of $48 oil. This is the cheapest in the integrated names. Even with all the cutbacks, he is still modeling production growth of about 4%. They stand ready to sell up to 50,000 barrels of production and to do a royalty spin out. It is approaching good value if you believe oil has found a floor at $48 WTI.