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Chesapeake Granite Wash - Distributions Diving, Hope Trade Continues
- Chesapeake Granite Wash Trust announced a quarterly distribution on November 6th of $0.5067, 12.6% lower than the previous quarter, confirming the expected trend to lower lows.
- Production for the quarter was flat relative to the previous quarter at 659 MBOE, but far below the year earlier level of 849 MBOE.
- The decline in performance can be traced primarily to poor well performance and slower drilling activity.
- The current traded price is substantially overvalued relative to its market peer group, trading at 1.76 times the latest PV-10 adjusted for depletion and a 1.5% implied rate of return.
- This report provides a detailed analysis on why CHKR is severely overvalued.
ECA Marcellus Trust I - 3Q Distributions Gap Down Again
- ECA Marcellus Trust I (ECT) announced a quarterly distribution on November 7th of $0.203 for common unit holders, a (27.8%) decline from the previous quarter.
- Distributable income for the quarter was $3.57M, $1.38M below the previous quarter.
- Production for the quarter was in-line with the expected decline model at 1471 Mcf even though one well was shut down for four weeks during the quarter.
- Based on remaining estimates of proven reserves and current expected future gas price levels, the current Trust market price level implies a 7.5% rate of return through Trust termination.
- This article provides a fundamental analysis of production trends, delivery costs and natural gas pricing trends to help investors assess the fair value of ECT as an investment.
SandRidge Mississippian Trust II- Has The Falling Knife Finally Hit Bottom?
- On October 30th SandRidge Mississippian Trust II announced distributable income for its June through August production quarter of $14.98M - $.402 per common unit, $0.00 per subordinated unit.
- Production for the quarter, impacted by continued poor well performance and no drilling activity decrease to 376 MBOE, far below the year earlier level of 541 MBOE.
- Trust drilling completion was delayed at least one quarter, now likely in the current Aug-Nov production quarter.
- Current results reflect the expected adjustment of production volume to a much greater and less valuable mix of NGL in the Trust product mix.
- This article provides investors updated information about Trust proven reserves, production and product pricing trends to assess whether SDR units are currently fairly valued.
SandRidge Permian Trust - Struck By The $80 Oil Lightning Bolt
- SandRidge Permian Trust announced a quarterly distribution on October 30th of $0.656 for common unit holders, a good news target level distribution.
- Distributable income for the quarter was $28.2M, which on a fully diluted per unit basis was below threshold, so subordinated units received only $0.184 per unit.
- Production for the quarter was 360 MBOE, down 11% year-over-year as drilling activity is no longer able to replace production from declining production in older wells.
- Post the quarter end (August), oil prices dropped severely across the entire forward curve to the $80 range.
- This article review of the Trust valuation with respect to the expected impact from drilling completion, expiration oil hedges in March 2015, and a sensitivity to oil price moves.
Watch Excess Reserves Post QE3 To Gauge Stock Market Risk
- This article examines the question - With the QE program ending for the time being, will the stock market suffer from the change?
- The large accumulation of Excess Reserves in the banking system caused by the program is looked at relative to changes in equity valuations and current economic activity.
- Post QE3, the way in which the Excess Reserve balance is managed will be an important data point to watch to gauge future Fed moves.
- The author concludes that currently the equity market has a bias upward, but investors overexposed with low cash balances or excess margin should lower exposure by selling rallies.
Think The Market Is Peaking? Remember 2000 And 2007
Mon, Sep. 8 • 26 Comments
- As the 4th quarter of 2014 approaches, equities are expensive, approaching historical warning zones on many relative measures.
- This article presents a means of reviewing how “rich” equity values presently have become by analyzing how the stock market historically trades relative to U.S. GDP.
- Saying equities are expensive is not the equivalent of assessing the risk of an impending market downturn.
- To help investors assess the likelihood of an imminent major market correction, this article looks at the status of four major influencing market forces.
- The forces, Fed Policy, U.S. Fiscal Policy, GDP Growth Sustainability and Energy Market Price Volatility, are all looked at in the context of the year 2000 and 2007 market peaks.
Chesapeake Granite Wash - Seriously, This Junk Is Worth $11 Per Share?
- Chesapeake Granite Wash Trust announced a quarterly distribution on August 7th of $0.5796 for common unit holders based on distributable income of $20.3M, both well below year ago values.
- Production for the quarter was flat relative to the previous quarter at 674 MBOE, but far below the year earlier level of 881 MBOE.
- Trust drilling is 80% complete and expected to be finished in the 2nd quarter of 2015.
- The current traded price of the Trust is 1.74 times the latest PV-10 and reflects an implied rate of return of only 1.25%.
- This report provides details on why CHKR is considered severely overvalued.
ECA Marcellus Trust I - Value Play Or Value Trap?
- ECA Marcellus Trust I (ECT) announced a quarterly distribution on August 7th of $0.281 for common unit holders, a reduction of $.053 per unit from the prior quarter.
- Distributable income for the quarter was $4.95M, $1.44M below the previous quarter, a 22.5% downward spike.
- Production for the quarter was in-line with the expected decline model at 1516 Mcf.
- The current Trust market price level implies a 6.2% rate of return to investors through Trust termination in 2030.
- Based on the analysis in this article, in my opinion, the units have room to decline in value further before becoming a good value play.
SandRidge Mississippian Trust II- Nightmare Turning Into Reality
- SandRidge Mississippian Trust II announced a quarterly distribution on July 31st of $0.486 for common unit holders.
- Distributable income for the quarter was $18.1M, which on a fully diluted per unit basis was below threshold, so subordinated units received $0.00 per unit.
- Production for the quarter continued to decrease sharply at 392 MBOE, far below the year earlier level of 651 MBOE.
- Risk remains high that proven reserves currently reported by the Trust are lower than presently represented in public financial documents.
- Based on the considered riskiness of current estimates of proven reserves and expected future oil and gas price levels, the current Trust market price level is considered overvalued.
SandRidge Permian Trust: Solid Results, Fairly Valued
- SandRidge Permian Trust announced a quarterly distribution on July 31st of $0.632 for common unit holders.
- Distributable income for the quarter was $30.6M, which on a fully diluted per unit basis was below threshold, so subordinated units received only $0.432 per unit.
- Production for the quarter was in-line with previous models published at 382 MBOE, virtually flat year over year reflecting drilling activity that has replaced production from declining older wells.
- Trust drilling is expected to complete by the end of the 4th quarter 2014.
- The August 1st Trust market price level of $12.66 is considered fair and implies a 9% rate of return to investors through Trust termination in 2031.
Watch Out For The Buyback Taper
- Blue Chip companies have increasingly traded off capital formation for share buybacks over the last 15 months.
- Data show that 27 out of 30 DOW companies since the end of 2012 have reduced shares outstanding, and that buy-backs in aggregate exceeded economic profitability.
- Breaking the data down by company, a large sub-set of weak companies surface which will only be able to recover by raising price levels or executing strategic M&A transactions.
Nervous Investors Move To Bonds Just Like Belgium?
- Recent Treasury International Capital Report (TIC) shows anomaly in the growth foreign ownership of U.S. Treasuries held in Belgium.
- Further analysis of the source of funds to finance the U.S. deficit shows Belgium and the Fed are the only two buyers on the margin currently driving rates lower.
- Unsettling data also is showing up in the deceleration of margin debt, which may be a signal of a market top.
- Author likes middle of the road Value over Growth Investing Strategy using high paying Dividend and Preferred stocks in this environment.
Market Winds Are Shifting - Time To Assess The Signals
- A review of the current U.S. equity market based on a 7 factor heuristic model highly correlated with historical major market declines shows shifting market trends.
- Market factors considered in the model include market trading patterns, relative interest rate spreads and 1st derivative changes in energy price levels, government expenditure growth and Fed policy.
- Signals indicate that the equity market likely still has a near term upward bias, but alternative portfolio investments on the margin are better relative choices at this time.
Emerging Market Debt Options To Hedge Fed Taper And Stock Volatility
- Emerging Market Debt Funds (TEI) (EMD) are relatively undervalued at this time and are likely to provide above average risk reward returns over the next several years.
- The major market correction in Emerging Market Debt in 2013 while U.S. stocks made a major run upward is very similar to conditions experienced in the late 1990s.
- The article analyzes what happened to TEI and EMD during the late 1990s, and compares the pricing action to current market conditions in the two time periods.
ECA Marcellus Trust I - Still An Expensive Natural Gas Pure Play
- ECT units current trade at a 1.74 multiple of the 12/31/2013 PV-10, comparatively high to industry peers.
- Supportive natural gas derivative contracts expired in March 2014, a negative for distributions beginning in August 2014.
- A model of expected future distributable Trust income shows the current unit traded value is unrealistically high relative to market risk.
SandRidge Mississippian Trust II: PV-10 Reflects Another Mississippian Nightmare In The Making
- SDR recorded a 3338 MBOE downward adjustment (13.2%) to proven reserves in the latest PV-10 due to well performance issues.
- PV-10 per unit fell to $7.62 at year 2012, a 43.6% decline from the April 2012 IPO standard measure.
- Downward trajectory of PV-10 revision is highly correlated with (SDT) proven reserve historical results (SDT is the sister Trust of SDR which went IPO in April 2011).
- Recommended Target Valuation Lowered to $7 per unit, in-line with $6 SDT Target.
Chesapeake Granite Wash PV-10 Update - Disaster Continues
- Newly published 12/31/2013 PV-10 shows an additional 6,220 MBOE reduction due to well performance (22% Year-over-Year).
- Overall the Trust has seen an impairment of 36.9% of proven reserves due to well performance issues.
- Closing price of $11 per unit on 3/14/2014 is 1.62 times the updated PV-10 value of $6.72; shares are considered grossly overvalued given continued high risk.
SandRidge Mississippian Trust I - PV-10 Update Reveals 'Pig In A Poke'
- SDT PV-10 Report published on 3/14/2013 shows a major 3032 MBOE reduction (22.3% year-to-year) due to well performance.
- Since IPO, the Trust has reported a 25.7% reduction in reserves due to well performance.
- Combined product mix changes due to lower oil production and continued well performance risk make these units unattractively overpriced at price levels above the $6.23 PV-10.
SandRidge Permian Trust- Ugly Updated PV-10 Priced In?
- PV-10 published on 2/28/2013 showed 2,192 MBOE downward revision in reserves - a greater than 10% drop relative to IPO levels.
- Energy price curve upward move recently off-setting negative reserve revisions.
- Price Target lowered to $12 per unit; upside possible if Forward Oil Price Curve breaks out and is sustained above $100 per barrel contrary to current market view.
- SandRidge Permian Trust- Q4'13 Results Show Risk And Reward
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- S&P 500 Up 20% In 2014? Re-Live The Bubbling 1990s
- Gold - What Are Investors Afraid Of Now?
- Fed Tapering History - Revealing Data Investors Need To Know
- SandRidge Mississippian Trust II: Third Quarter Results Down, Units Oversold
- SandRidge Permian Trust: Third Quarter Results Show Solid Performance
- Chesapeake Granite Wash Trust Q3 Results - Expect Pain To Continue
- SandRidge Mississippian Trust I - Q3'13 Results Poor, Risk Elevated