Daily Stock Opinions and Ratings

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Eric NuttallObsidian EnergyOBE.TODON'T BUYJun 20, 2013

There have been 2 knocks against this company. One was their execution and the other has been their debt. The execution they have fixed by having the CEO retire besides removing a large number of their technical team. Regarding the debt, they have cut their dividend by about 45% and have a payout ratio of about 130%, which means they are spending 30% more on dividends than they are getting on cash flow plus CapX. Debt to cash flow is over 3 times, which is a very high number.

Eric Nuttall

Unlock Rating

$11.35

Stock price when the opinion was issued

$15.01

As of Jun 09, 2026. Market Open.

oilgas

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DON'T BUY

Somewhat contentious CEO. Fairly good well results. Market cap is so small as to be beyond irrelevant for almost all institutional investors. Better names to own.

DON'T BUY

Not a good investment with current management team. Other energy companies available with better opportunities.

DON'T BUY

Did a buyout that diluted their stock materially. There is pure inventory but with Clearwater optionality. Need a new Board, new CEO and not a name he would own now.

PAST TOP PICK

(A Top Pick Oct 22/18, Down 88%) He sold at $3.22, taking a big loss. They have a lot of worries. They are looking to sell the company. They might just liquidate the company, but clean up could be very expensive. He does not like stock consolidations and used that as a trigger to get out. He would not buy this now. He made a mistake -- when debt came down, so too did revenues.

DON'T BUY

The question is their ability to grow. They are going to try to sell the company. They have had declining volumes.

RISKY

They have put themselves up for sale. They are a Cardium player with quite a bit of debt. They have a lot of non-producing wells. People are worried about how much value there really is in the company after debts are paid off.

PAST TOP PICK

(A Top Pick Apr 18/18, Down 65%) There could still be a takeover. Their revenues are way down while debt has gone way up. He's moved on.

DON'T BUY

New interim president and CEO. Pretty good numbers on cardium wells. Issue is the debt. Debt is 22% of equity, but it's going the wrong way. Declining production and volumes. Not as attractive as the others. Need to show they can grow core numbers of the cardium. Guidance is negative. Capex is about equal to cash flow.

WATCH

He is watching it. The company is not going to keep their volumes flat. The CEO changed. They are guiding down on production while spending on CAP-X. He is keeping an eye on them.

HOLD

A takeover candidate? He was wrong with this. He recently moved it from a buy to a hold. It's high-risk and high-reward, has "danger" written across it. He likes the idea of a takeover, but doesn't know if it'll happen. This could be a good play in oil/gas with a lot of potential. He hasn't sold it, but at the same bankruptcy remains a real possibility.

DON'T BUY

He is watching it but it is not on his list right now. They are not experiencing very good growth right now. Their debt keeps going up. There are better names with more upside of growth.

DON'T BUY

The company has 19% debt and not a bad balance sheet, in his opinion. Book value is $3.90. It is not on his coverage list because they dropped production in their third quarter. They are spending money and not producing the assets they had before. However, this one is cheap.

DON'T BUY

Their debt level is too high for her right now. Debt levels are so important in a cyclical businesslike the energy space. They will be hurt by recent weakness in oil prices.

TOP PICK

They had over $3 Billion in debt but it is down to $408 Million due to them selling off a lot of assets. They had to hedge to survive and they all come off in the new year. The company loses money quarter after quarter, but that could change. There is huge insider buying. A major property of theirs came in on time and under budget.

HOLD

It could be sold before the end of the year. Results today were not very good. They are looking to sell some of their properties. They have these hedges in place at $50 and the oil price is much higher now. They still have a fair amount of debt. He is happy to hold it. We will see more pieces coming off. It is still high risk due to the debt. This one might get taken over so he holds it.

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Eric NuttallObsidian EnergyOBE.TODON'T BUYJun 20, 2013

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