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Brian McMorris  

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  • Why Penn West Petroleum Can Deliver More Upside [View article]
    All good info. Much different assumptions and analysis than mine, but it is all a guessing game. I come out with over $3B value net of debt based on 63,000 BBL/Day left if debt was paid off through divestitures of "non-core". on 500M shares, that is $6 / share net book value at today's oil price. If oil finds a floor in the next 2-3 year years, it is not hard to see a double. This company was worth $14 a share 4 years ago with much worse operations. Yes, production was a lot higher (I don't ever remember 180K / day, please tell me which quarter; 140k / day was the peak as I remember it). But at that production it was at an operating loss it was run so poorly. Now with operations streamlined, PWE should print money on any kind of oil price rebound. The survivors will do well whenever (not if) prices rebound
    Oct 31, 2015. 02:39 PM | 1 Like Like |Link to Comment
  • Why Penn West Petroleum Can Deliver More Upside [View article]
    simple math: Weyburn was sold for a little over $200MM. Sold production is 2500 Bbl/day. Total PWE production is about 90,000 Bbl/day. Remaining debt is $2b. Debt is completely paid off at 10 x 2500 Bbl/day or 25,000 Bbl/day.

    Remaining production is 65,000 Bbls/day, free of debt.

    this does not include non-producing leases in core assets.

    PWE easily covers all its obligations with net assets of 65,000 producing Bbls/day worth $5B plus non producing assets owned.
    Oct 20, 2015. 08:37 PM | 2 Likes Like |Link to Comment
  • Why Penn West Petroleum Can Deliver More Upside [View article] could be right of course. That is why I have held on to my 10,000 shares. I thought about buying more at $0.50 just to average down. But I already am top heavy in materials and energy. I am just as happy to wait.
    Oct 17, 2015. 08:38 PM | 3 Likes Like |Link to Comment
  • Why Penn West Petroleum Can Deliver More Upside [View article]
    My reading on the range for a barrel of oil is that it really can't go much below $40 so long as the world economy stays out of a deep recession / depression (in which case, many other types of stocks will have problems). The reason for this is the Saudis have artificially depressed oil price to drive out the NA frackers and to punish Iran and Russia. They could do this so long as they had the reserves to cover their sovereign financial obligations. But apparently, they have gone through $800B in reserves and can no longer afford to depress global pricing. They will likely cut back production and that will remove several million BBLs/day from world inventory. Price will rise back towards $60-70 USD (maybe $85-90CDN) over the next 2 years.

    This is all very speculative. There are many assumptions in this "most likely case" such as Russia and Iran go along and don't themselves drive down price (hard to know why they would), global economy stays together, no dramatic change in demand due to technology, etc.

    PWE had BV of $14 / share, including impaired goodwill of about $2, prior to the energy crash. That goodwill has mostly been written off now. It has shed some marginal assets but reduced debt 1:1 with those sold assets, so that has not changed its BV (price per probably BBL has); it greatly improved its FD&C efficiency the past two years. It is conceivable PWE can get back to $12 in the next 3-5 years, though a lot most go right for that to happen.
    Oct 17, 2015. 08:34 PM | 2 Likes Like |Link to Comment
  • Why Penn West Petroleum Can Deliver More Upside [View article]
    Good analysis. I would have liked to pile on more PWE in August, but not sure the commodity crisis is over. It is having a short respite as sellers became exhausted. But for commodities to regain their strength of 2009-2012 will require the large EM markets (China, Brazil, India, Indonesia) to rebound. Those economies continue to decline, so underlying demand / demand growth is going with those economies. So will global markets.

    I expect a retest of major market lows later this year or early next. Now is actually a good time to trim short term gains. I am selling off more of my stocks in the next 2-3 weeks. But I hold my energy and precious metals for the long haul, including my 10,000 shares of PWE. Would like to double that position if price gets back to $0.50 to average down to $2/share.
    Oct 17, 2015. 12:19 PM | 1 Like Like |Link to Comment
  • Can Penn West Petroleum Make A Comeback? [View article]
    The Q2 PWE Balance Sheet shows Shareholder Equity to be $5.3B. This is before the most recent asset dispositions. But those will be used to reduce debt (liabilities) by a similar amount so will be a wash on the balance sheet.

    There are still 500M shares outstanding on PWE. This simple measure puts the value per share at over $10. There is still some Goodwill on the books, an empty and worthless entry. The PWE brand is worth almost nothing. So back out the $700M in Goodwill and we get to the $4.6B in Net Asset Value. Divide by 500M shares and the value is still over $8/ share with assets fully devalued to the current price of oil and less dispositions. That value is not realized in the market due to concerns over bankruptcy due to cash flow not able to cover debt service. But exec management continues to demonstrate its ability to stay in front of that problem, even at $40 oil.
    Oct 4, 2015. 11:39 AM | Likes Like |Link to Comment
  • Penn West Petroleum - Pain Has A Name [View article]
    PWE is just a levered play on energy supply-demand. There has been a long term cycle on this balance since the beginning of the oil market. The last big down cycle lasted from 1985 to 2000, 15 years. We had a 14 year demand spike following, interrupted by the Financial crisis, before we went back into decline in mid-2014. It may take 15 years to clear the excess supply but no longer. I count on the savvy PWE management to keep PWE solvent until the tide once again turns. When it does PWE will be a very lean, oil pumping machine
    Sep 24, 2015. 08:47 AM | Likes Like |Link to Comment
  • The Outlook For EM Equities Is Looking Brighter [View article]
    There is a lot of conviction for the EMs to write this piece. Totally a technical perspective that "the bottom is in" for "EEM". Fundamentals do not back up that view as EM economies continue to weaken on the back of China's economic decline. But even that technical view is again breaking down today with EEM approaching $32 at the open. If it cannot hold that August 24 "flash crash" low, it is headed much lower. The Feb 2009 low was $21. Can it go that far? Maybe. In any case, I am selling my shares to Mr Bush as I am short EEM through Puts (and have been since EEM was at $44)
    Sep 24, 2015. 08:42 AM | Likes Like |Link to Comment
  • Penn West Petroleum - Pain Has A Name [View article]
    They will. As far as I am concerned, the Roberts' team has made all the right moves, except failing to hedge production with WTI at $100. But they are hedging now. This is a savvy oil production team. They know what they are doing and as you and others have pointed out, the exec team has a lot of skin in the game. They are very motivated to see this through. I remain long over 10,000 shares w average cost around $4.
    Sep 21, 2015. 09:53 AM | 2 Likes Like |Link to Comment
  • Penn West Petroleum - Pain Has A Name [View article]
    The problems lingering over PWE the last time oil was at $80 WTI, mid 2014, are largely addressed. SG&A which has been bloated for a decade, has been slashed; drilling unproductive wells is over as drilling costs for good wells have come down; bad acquisitions have been shed; debt has been halved and covenants improved providing more time to retire remaining debt;

    The cost structure of this company has been dramatically improved in the past 24 months. If oil can ever get back to $60 WTI, and assuming the Canadian currency maintains its current weak posture vs the USD, PWE will make a lot of money
    Sep 21, 2015. 09:41 AM | 3 Likes Like |Link to Comment
  • Penn West Petroleum - Pain Has A Name [View article]
    PWE and other oil companies are "in pain". That constitutes investable news? The declines in FFO were reported as if this article is robo-written. A 45% decline in revenue YOY July 2014 is not informative. I see that every day at the gas pump. Where are the SA editors when we need them?
    Sep 21, 2015. 09:37 AM | Likes Like |Link to Comment
  • Can Penn West Petroleum Make A Comeback? [View article]
    Thank you Flaherty and Harper!! F--d up the entire Canadian oil industry (though it would not have made a difference given the idiots over-drilling shale in America)
    Sep 20, 2015. 10:28 PM | 2 Likes Like |Link to Comment
  • Can Penn West Petroleum Make A Comeback? [View article]
    PWE has GREAT assets. That has always been the story on PWE. If it has to liquidate some non-core assets to eliminate debt, so be it. Smart move in this environment. The past management should never have gotten so indebted buying s--t leases. Roberts' team has done a great job maneuvering around and unwinding bad past decisions. If anyone is doing research, PWE have been able to maintain their output at near 100,000 Bbl/Day even with dispositions. They just drill their remaining leases.
    Sep 20, 2015. 10:25 PM | 1 Like Like |Link to Comment
  • Can Penn West Petroleum Make A Comeback? [View article] team continues to deliver on its promises of reducing expenses and debt. It is not at risk of bankruptcy but is priced like it. This is the worst energy pricing environment in 30 years and PWE seems to be managing the problems better than most, yet gets trashed by pessimistic investors (the plight of being a small cap). Industry global demand is solid. Oil is not going away any time soon, though maybe some day (beyond my lifetime). I understand why people who have not invested in energy might want to stand aside, but if already invested, why sell here? Locking in losses is the stupidest error in investing.
    Sep 20, 2015. 10:20 PM | 2 Likes Like |Link to Comment
  • Penn West Petroleum's (PWE) CEO David Roberts Discusses Response to Commodity Environment and Update to 2015 Guidance Conference (Transcript) [View article]
    I know there are a lot of haters on PWE and have been for a long time, deservedly so prior to the current team. But these guys have managed to keep this company out of bankruptcy, despite the incredible malfeasance of the 2006-2013 team which inflated SG&A immensely, was inefficient in FD&C and added on debt at high (9%) interest rates like nobodies business. It is amazing this thing is still standing and is even in reasonable shape.

    Sure, it would be much better at zero debt, but the debt is likely sustainable as it now is. Seems very cheap for a company that will likely be a survivor when many competitors aren't left standing in 5 years. I have quite a bit and will average down further when the bottom looks imminent. But as Roberts says, that can be 5 years, maybe more. The last big energy depression lasted 15 years. Staying pat for now
    Sep 2, 2015. 11:40 PM | 4 Likes Like |Link to Comment