Stock advice in actual English.
Joined Sep 2, 2009
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BAS Kicking Me In The Mouth

And BAS is down another 5% today, perhaps as a product of follow through weakness in the sector, an announcement that they intend to raise $250 million, or it’s just leading the charge after Ben Bernanke’s…um…what the hell was the point of that speech anyway?

I don’t know; you pick the reason. None of them really makes sense.

After Key Energy’s disappointing guidance, the investing world is scared – scared, mind you – of any (already highly likely and anticipated) forward guidance that is anything less than what was expected at the beginning of 2012.

Of course, the entire energy sector sold off hard between then and now, rendering all the fracking companies dirt cheap. And secretly, we all know that natural gas / oil extraction in this country is going to continue to expand voraciously. And especially so just as soon as we get some more base demand online and some natural gas price stability. Which looking at coal miners crumpling, will be coming shortly.

Hell, we don’t even need demand for natural gas – just somewhere to put the God damned stuff would suffice…

But that’s all unimportant now. If BAS should print numbers that show a lower growth rate, even though we all know it’s probably just a lull, the market is preparing to give the stock a PE ratio that reflects the disappointment in its entirety.

This is a grave mispricing, in my mind. But hey, I’m happy to embrace and buy the plunge. Both Obama and Romney appear to be very accommodating to the drilling taking place in this country. And to me, energy services companies are still the best way to try and play a bottom in natural gas prices without actually getting beneath that falling piano.

Meanwhile, BAS persists in being one of the only energy services companies that actually has any cash on hand. They’re about to have $250 million more. If we get the slowdown everyone is bracing for, I can tell you without hesitation it will kill dozens of the weaker players. They have no cash on hand; no buffer to absorb shock.

With BAS, I’m looking ahead, to a time when natural gas production is expanding again, even slower than it was this past year; to when natural gas demand has grown on the backs of cheap volumes; and to where BAS is one of the only remaining players.

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  1. zzzdoc


    You type: “Both Obama and Romney appear to be very accommodating to the drilling taking place in this country”.

    I thought Obama was for no fossil fuels. If he gets re-elected, will he again be pro-wind, pro-solar again?

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    • dancin

      Obama has been one of the best presidents for the oil and gas industry to date especially with his shut down of the competing coal industry. Plus if he does win election, the Republicans still in office will dig in on everything. So barring an unlikely Democratic takeover of both houses of congress, worst case is everything staying the same as today with them throwing money to wind and solar, continuing to kill the coal industry and little happening to oil and gas.

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    • Mr. Cain Thaler

      Natural gas is cleaner than crude oil, and I’ve noticed that the anti-fracking groups have not been receiving the usual open armed invitation Democrats usually reserve for environmentalists.

      An Obama EPA would normally have shut down fracking first, then used their brains after. But they actually passed at first, and have since retraced some of their “Fracking Pollutes – Kills Ducklings” rhetoric.

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