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Wednesday, May 28, 2014

Falcon Energy Group, an undiscovered gem

Falcon Energy reported a full year profit of US$102.084 million as compared to losses of US$2.15 million a year ago. Its cash flow increased from US$12 million to US$40 million from good operating income and loans from banks.

The US economy interest rates remains close to zero % and Falcon energy leveraged on its low interest rates to grow the company. However, risks of hiking interest rates remains as US has yet to raise the interest rates. 

Its jack-up rigs are expected to be ready by mid-2015 to mid-2016, which are expected to be in high demand. The company now still have recurring income businesses in the Oilfield Services Division. 

Price now remains cheap given its improved profitability. Furthermore, it leveraged on cheap loans to fund future expansion, which makes good sense for the company. 


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