Red Fork Energy has been placed into receivership
John Robertson
PortfolioDirect
Red Fork Energy has been placed into receivership. Four points come to mind. Firstly, this was an accident waiting to happen. I warned in my 14 February wire that its debt fuelled growth meant that if oil prices fall the leverage downward is potentially spectacular. Secondly, there are other companies pursuing the same unsustainable business model that relies on a rapid build up in production from very short life wells to create share price momentum. Thirdly, because the Red Fork approach and experience is not unique, it illustrates how the rapid expansion in US output can come to a halt quickly. The same structure that allowed a rapid rise in output creates the circumstances for its reversal. Fourthly, OPEC will have got it right if it can hold its nerve because there is scope for a near term oil market rebalancing as these forces play out.
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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business strategist and investment market professional for over 30 years after starting his career as a Commonwealth Treasury economist in Canberra. Since being Australia's top-rated commodities analyst and chief economist at one of Australia' leading stockbroking firms, he has advised companies across the mining, consumer products, IT and biotech sectors on their equity market relations. He leads the firm's investment evaluation and security structuring activities on behalf of the Australian Small Scale Offerings Board (ASSOB), the world's first equity 'crowdfunding' investment platform. John Robertson discusses the interaction of mining and investment markets in his weekly 'From the Capital' column in Mining Journal.
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John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
John Robertson
PortfolioDirect
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
Expertise
No areas of expertise
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