Obsidian Energy (OBE.TO)

Their leverage is far too high. The market is being absolutely merciless with corporations where the balance sheet doesn’t look strong or pristine. Thinks this is going to be pretty dead money for a while.

It is quite a disaster technically. The downtrend is long and has accelerated. It is a falling wedge that broke out to the downside. Get out if it rallies. It is a very risky stock.

This model works at $70 oil, but does not work at $45 oil, so he sold his holdings. The risk is, if oil prices stay where they are, they will probably have to cut their dividends again. They have good bank lines, but these days those are questionable, as he expects banks will be cutting back on them.

It has been such a bad story. Just unwinding the problem, but they are just too overlaid with debt. Someone has to swoop in and buy it. They have to sell off the crown jewels to pay off the debt. They are stuck. You don’t need to own it. Look for quality companies.

Because of debt, he would not be holding this. The biggest risks are crude oil and natural gas prices and a drilling success. He prefers the companies with the least amount of debt and with a low cost of production.

It was not well capitalized. It is not one he would go anywhere near whatsoever. This is not a well capitalized, well run company. They could be a total casualty.

His company has downgraded this as there are some concerns going forward. If you own, consider switching into something else. Look for the ones that are going to rebound the fastest. Companies with long-term hedges, low debt and low cost of production.

Had new management come in. Yield of 18% implies that they are going to have to do another cut. They are trying to sell off assets and refocus. She wouldn’t put any money into energy producers until we see stabilization in crude oil. For investors wanting to step into energy companies, they should be really buying financially strong companies that have a strong balance sheet with a hedging program in place.

Great resources, but this is not one he would put new money into. There are much better companies out there. They still have a lot of work to do. He would avoid this one for the time being.

This company has been in a state of turmoil. Their balance sheet is still quite levered. Have been hoping to sell off some assets and understands they will be selling off some with about 7000 barrels per day. That should help mitigate the situation. Has been some management turnover in the last couple of years, but the worst thing that is hitting them right now is the lower commodity prices while they are financially constrained. There are safer ways to participate in the oil patch, but if it survives, it could have a lot more leverage.

Operational execution has not been great. The capital structure had too much debt. They paid a non-sustainable dividend for years. They have cut that and have been trying to sell assets. There has been management turnover. The latest shoe to drop was a change in the CFO and a whole bunch of restatements of the financials. Also, believes there are some class action lawsuits. Too much debt.

Sold some assets for over $300 million. Taking some really important necessary steps. Modeling $80 oil and $3.50 natural gas, its debt to cash flow is still too high at 3.4 times. Priced pretty cheap relative to the group at about 6.4, but not cheap enough. Its payout ratio would rise for its dividend to about 161%. There are better alternatives amongst higher risk names than this.

Have gone through some restructuring and accounting issues, which are now largely behind them. They are still restructuring their portfolio and making some asset sales. There are more attractive names than this one.

Avoid it. It is a big moving ship and it takes a lot to move it. There is no need to own it. Too many headwinds.

To rectify its position with its covenants, the dividend is going to have to go. The best case would be a major cut.