Nexen (NXY), a Calgary-based oil and gas company, is up 88 cents to $13.91 and directional sentiment in the options market is bullish, with increasing activity seen in March 15 and 17.5 call options. 4,600 contracts traded (all in lots of 357 and fewer contracts). Looks like buyers are taking new positions, paying 40 cents for the 15s and 15 cents for the 17.5s. ISE sentiment data confirms that investors are buying calls to open.
The bullish flow comes amid rising oil prices and ahead of a presentation Thursday morning at the Canadian Energy Conference. Crude is up 75 cents to $47.82 and its highest levels of the year.
In late 2008, Nexen predicted that it expects free cash flow of between $2.3 and $2.9 billion assuming WTI crude oil price stayed between $50 and $65 a barrel. That might be down a little due to the recent fall in crude oil, but still above the $1 billion of free cash flow in 2008. The company said it was using the free cash flow to build cash balanced and repurchase shares. It had about $2.8 billion in cash at the end of 2008 and $2 billion in undrawn credit lines. It reported a net loss of 35 cents per share for the fourth quarter on Feb 12, due in part to a $317 mln impairment chart. Revenues rose 8.1 percent year over year to $1.7 bln, significantly better than analyst estimates of $1.2 bln.
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Frederic Ruffy is a well-known trader, writer, and strategist who has spent years educating investors and creating intelligent, insightful, unbiased market observations that are frequently cited by the Wall Street Journal and other financial publications. As senior analyst, Fred provides frequent and regular notes and daily updates for activity of interest.