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BXE - what went wrong

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asked Dec 14, 2017 08:51 AM by
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updated Dec 14, 2017 11:49 AM by
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Bellatrix has been talked about a lot on this site. Valuation analysis was based on an expectation of rising oil prices.

As turns out, oil has not done too badly. And yet BXE is still hitting new lows. Why? I would answer this question by pointing out that BXE is 76% Natural Gas. Alberta Nat Gas prices (AECO) have had a terrible 2017 and are hovering around multi-year lows.

Chart here. Click Gas, then AECO.

https://www.gljpc.com/price-charts

Bottom line: don't buy a gas stock based on analysis of oil. AECO gas has only mild correlation with oil. Jin, I would be interrested to hear your thoughts.

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just pointing out that the other oil stocks have not gained much either despite oil over 55 a barrel. interested in jins opinion too. i dont think it's worth selling bxe. realistically it's not wortg about 40cemts before the reverse split happened. how much lower can it go.

Christopher Harrington ( Dec 14, 2017 08:07 PM )edit

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answered Dec 18, 2017 07:46 PM by
Jin Won Choi gravatar image Administrator

Hi dlander,

For BXE to generate the much needed cash, both oil AND gas needs to be at a certain level. While oil prices have been fine, natural gas prices in Alberta has been in the dumps these last few months because of pipeline constraints. BXE's cash flow will be OK this year because they had hedged over two thirds of their production, but next year will be a different story as they've only hedged 40% of their forecasted production.

Theoretically, BXE could switch their focus to drilling for oil. However, Albertan oil producers are also dealing with pipeline constraints. Thankfully, BXE doesn't have any substantial debt due until 2020, but the company's cash flow might not look good until the pipeline constraints are resolved in a year or two.

in the meanwhile, I still hold onto my BXE shares. I know the stock isn't getting any love, but it's way too cheap for me to dump them.

Jin

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answered Dec 19, 2017 09:13 PM by
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Jin,

It would be great to know what other stocks from the previous portfolio you still own.

Another one that did really bad is BBBY. Do you still own this stock

Thanks

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Asked: Dec 14, 2017 08:51 AM

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Last updated: Dec 19 '17

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