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Douglas E. Johnston

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  • Is The 'Oil Glut' A Myth? [View article]
    the question to ask is who sold all the puts that the E&Ps bought to hedge their '14 and '15 production? And where did they off load that risk? Classic tap-on-the-shoulder moment for some funds/desks that were short low-delta puts....
    Dec 18, 2014. 04:32 PM | 2 Likes Like |Link to Comment
  • Hold Your Nose And Start Buying Royalty Trusts [View article]
    Id wait on all the trust inc. DMLP, which I've owned and like. I see their dist getting down to the 80c-$1 range given oil strip - probably see the $15-20 range before this is over....MHO of course
    Dec 3, 2014. 03:51 PM | Likes Like |Link to Comment
  • OPEC Stands Firm: The Wake-Up Call The Oil Industry Needed [View article]
    "great opportunity to get hold of some really strong companies at depressed prices."

    any specific names?
    Nov 28, 2014. 01:04 PM | 2 Likes Like |Link to Comment
  • Denbury Resources -8% on capex cutting plans, two downgrades [View news story]
    well i guess the big concern is management's credibility. The production numbers for this year have been disappointing although there are fixable problems. If they don't improve operations, then the idea of 550mn capex and flat production comes into question. Market seems to be erring on the side of caution. On the other hand, their cost numbers for Q3 were good. If they can maintain discipline, then they should be a cash flow machine. I was a bit put off about the short 65 puts - why didn't they have that in their other presentations....
    Nov 20, 2014. 01:34 PM | Likes Like |Link to Comment
  • Uralkali Mine Shutdown Means N.A. Potash Producers Could Benefit [View article]
    Weren't you very bearish on POT? Does this event change your view or is it just for a trade?
    Nov 20, 2014. 01:30 PM | Likes Like |Link to Comment
  • Denbury Resources -8% on capex cutting plans, two downgrades [View news story]
    the best is wunderlick:

    "we looked at Denbury's asset base and financial plans as having strong downside protection in an environment like this; but the moves made by management for 2015 and potentially beyond have in our view muted these strengths,"

    what jibberish...that was the whole point - they can cut capex in 1/2, generate 200-300mn in total free cash (buybacks, M&A, etc.) while maintaining flat production...these analysts are worthless
    Nov 19, 2014. 03:05 PM | Likes Like |Link to Comment
  • Potash Corporation - Attractive Dividend Hides An Overpriced Stock [View article]
    Can I have my page hit back....these bots generating 5 articles a day really dillute SA's value IMO
    Nov 19, 2014. 10:17 AM | Likes Like |Link to Comment
  • Denbury Resources: Built To Win [View article]
    Well that was not fun. With WTI at $75 and if that holds (on average) through 2015, they will generate $200mn in free free cash flow (after capex/div). My guess is they will use it to buyback shares or prefund '16 capex - they are certainly playing it conservative IMO. Leverage will remain below 3. Firing the OPs guys was a response to the disappointing production that the CEO stated on last CC. Is that a +tive or a sign of something rotten in Plano? Should find out a lot more tomorrow. I wish I could have timed this one better but we added some this morning....close to full risk.
    Nov 17, 2014. 02:00 PM | Likes Like |Link to Comment
  • Denbury Resources: Built To Win [View article]
    @7519671 - Thanks so much for your insightful and helpful comment. And I am glad my article was a "BIG help" Please don't hold your breath too long - u can damage your brain cells.
    Nov 17, 2014. 01:56 PM | Likes Like |Link to Comment
  • Denbury Resources to cut next year's capital budget in half [View news story]
    agreed - According to our calcs, they will have 200+/- 50 mn in FFCF (After capex/divs) @75 WTI - seems they are going to buyback shares instead
    Nov 17, 2014. 01:51 PM | Likes Like |Link to Comment
  • Denbury Resources to cut next year's capital budget in half [View news story]
    The CEO's final comment on last CC

    "These production shortfalls are not acceptable and we are working diligently to address them."
    Nov 17, 2014. 01:46 PM | Likes Like |Link to Comment
  • Credit Suisse: Gold to be in deficit by 2016; AEM, EGO are top picks [View news story]
    there is a significant lag between capex changes and production changes
    Nov 14, 2014. 12:47 PM | 1 Like Like |Link to Comment
  • Potash Corporation - Attractive Dividend Hides An Overpriced Stock [View article]
    Its unclear how you go from some of these metrics to what you call scores. Is it a rigorous mathematical formula - like some kind of historical regression. Or is it subjective. Like how do you get a 1 out of 3 on competitive position? And you state that "The company's interest coverage is strong and the balance sheet does not add a significant amount of risk for its shareholders." and yet they only get 1.5 out of 3?

    And then how do you convert drag numbers to target price? Is there any proved efficacy in your model? Like historically, how did one do vs say the S&P following this approach?

    I just did my own subjective DRAG #s and came out with a target of $35.
    Nov 14, 2014. 11:26 AM | Likes Like |Link to Comment
  • Why I Am Still Long Calumet, Despite The Recent Drop [View article]
    Steve - Thanks. My point is I like to think of my distribution partly a return on capital and partly return of capital. How one divys (pun intended) that up is open for discussion and I agree that the assets' market values can change, which makes it more complicated. But some estimate for the value and maturity of the assets needs to be considered when the company is paying out such high ratio. As an example, CLMT's limited partnership interest has declined $200mn since end of year. In a theoretical world, the ROC would need to be reinvested back in if one wants to use constructs like yield, or div disc. models. So I think we can agree that the "true" yield on MLPs are lower than their stated distribution yield.

    And yes, where one issues new shares is important. If they can be issued higher than NAV then current partners benefit as they get to effectively sell some shares at "high prices".

    anyway, this makes for good discussion but probably more suited for another board/time

    Nov 14, 2014. 11:15 AM | 1 Like Like |Link to Comment
  • Update: Calumet Specialty Products Earnings [View article]
    It's quite clear, if you look at the #s, that the reason that CLMT, and many other refiners, had a bang up quarter was the drop in oil prices vs. their refined product along with a seasonal boost in drilling fluids. If oil prices had not fallen, the story would be different. While they are partially crack spread hedged (and cracks were lower in Q3), the fact that (e.g.) jet fuel prices are sticky (contracted 3-6 months in advance using forward curve) means that CLMT is, in effect, short oil. For example, December futures were at 95 back in late spring when jet fuel delivery prices were probably being locked. This is a fact, that I missed in my modeling. One should note that with low forwards for '15, a reversal of this quarter is entirely feasible if oil reverts higher.

    I'm not here to defend Tim but I have found him to be an honest author. He corrected his error in the comments, I believe, and the crux of his article was still valid. CLMT had 7 quarters of sub 1 coverage with quite a few -tive ones in there. In all likelihood, 2014 will be about 50% coverage so two years. Anyway, I would cut him some slack but whatever.
    Nov 14, 2014. 10:52 AM | Likes Like |Link to Comment