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Douglas E. Johnston  

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  • Growth Remains A Concern For Denbury Resources [View article]
    CA - That sounds about right. I was hoping the author was willing to share some of their analysis other than debt to ebitda will increase when ebitda declines...to your point, however, yes it would appear that the senior leverage ratio, which is the one that matters for the next few years, will actually decline
    Jun 26, 2015. 12:07 PM | 2 Likes Like |Link to Comment
  • Growth Remains A Concern For Denbury Resources [View article]
    How much free cash, after dividend and capex, do u expect DNR to generate in 2015?
    Jun 24, 2015. 04:41 PM | Likes Like |Link to Comment
  • Teekay Tankers: A Speculative Investment Worth Inspecting [View article]
    It's always fun to go back and read an old article, especially one where the call was good. Teekay Tankers (TNK) has had a great run over the last few year's and followers will note we've written articles annually to update our views which have remained the same: Bullish.

    Our last article, written in back in Feb. estimated that TNK would earn 75c-$1/share this year. But, with the strength in the global crude tanker market, we've increased out estimate to 90c-$1.20/share in net income and $1.40-$1.50 in cash flow for 2015. Q2 will likely show quite good numbers with cash flow coming in just under Q1 at about 40-45c and net income at about 30c. This is impressive since Q2 is usually the beginning of the seasonally low period but, with mid-east oil production running high (longer ton-miles) and refiners cranking, the spot shipping rates have been impressive. We would note that we are assuming a significant drop in rates both for Q3 (-25% from H1) and the H2 (-20%) to be conservative given we should see some pick up in fleet supply and refiner drop-off. So, our estimates could end up being pessimistic. That said, even with net earnings of $1/share, the multiple looks quite low and we foresee a $10 share price before year-end. Short-term, the price may be range-bound given the potential for ATM equity issuance (up to $80mn) but proceeds will go to continued balance sheet strengthening and potential asset purchases. This should lead, ultimately, to a stronger share price.

    Over the last few years, TNK has made the right moves. And they should continue to benefit over the next two+ years as fleet growth remains modest. While 2016 will see some supply growth, leaning toward clean tankers, 2017 should remain in check. All in, we see spot rates moving up to 27k/day and 30k/day, respectively. This will lead to continued growth in free cash flow, allowing debt pay downs and organic fleet growth. This is important to note because at $24k/day or above our analysis indicates that TNK can not only pay down its required debt but also organically grow its fleet to maintain fleet age. The new potential equity issuance is not dilutive; it will increase shareholder value.

    TK, TNK's parent, own 20+% of the equity providing a nice backstop and TK's CEO recently rejoined TNK's board - a welcome sign, in our opinion. We look for TNK to cautiously increase its dividend over the next few years (~4c/annual increase) and with earnings moving up towards $1.5 over the next couple of years, TNK should trade in the mid-teens by 2017, particularly if oil production remains high/prices low. So far, TNK has rewarded us handsomely over the last few years and we look for more to come.
    Jun 18, 2015. 11:29 AM | Likes Like |Link to Comment
  • Enduro Royalty Trust: Putting A Big Squeeze On Income Investors [View article]
    the cost to short and fear of squeeze is the only thing that keeps price up
    Mar 13, 2015. 02:29 PM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    they typically have issued around this time every year, last year excepted. It is the seasonally strong season so the street takes down the paper and then runs it up into June and dumps. Might be worth a short-term piggy back as the they'll probably defend share price here...

    In the past, they issued to buy more "production" now it is to reduce leverage. Depending on results and how quickly they want to get leverage down, they should/will? issue another 7 next spring. I'm still not convinced these guys have their act together (anchor and SOS is going to be bad)....gl
    Mar 13, 2015. 10:09 AM | Likes Like |Link to Comment
  • Calumet Specialty Products: No Fuel For Growth [View article]
    They finally issued equity. I guess they figured leverage a over 5x is not too smart for a supposed income vehicle. And they do it right as the seasonal strength peaks so that the street can run it up on Q1 results and dump on yield investors for a tidy profit....and the wheel goes round
    Mar 12, 2015. 05:19 PM | Likes Like |Link to Comment
  • BioScrip's Turnaround Story Will Turn Around Some Heads [View article]
    I'd also mention, they amended the credit facility so that the 7.25 leverage covenant is in effect for the next year. With the facility down to $140mn out after prefereds, target is 20mn adj EBITDA min. The '14 run rate was 40 with another 15 in cost savings that are "locked" in. Revenue should be $1bn and with 8% margin, target is, call it, $50-75mn in adj EBITDA for '15 (NI any 100% reserve collected). Take mid and 13 multiple with a bit more debt paydown, I see a $7 price fully diluted. There is a big IF in there though...gl
    Mar 12, 2015. 12:16 PM | Likes Like |Link to Comment
  • BioScrip's Turnaround Story Will Turn Around Some Heads [View article]
    yes - feeling a bit humbled at the moment, although we did keep powder dry given the likelihood of a poor Q4. The capital raise of $82.5mn, IMO, improves the chances of success and reduces the debt load to call it $350mn. It will add about 20mn shares fully dilutive assuming rights are fully subscribed. We'd note the preferred has a convert of $5.17 and warrants (10y) are struck at 5.30 and 6.60 so all OTM at the moment. Previously, the market put about a 15x multiple on $50mn EBITDA (~6.5/share mid trade range). Using a similar metric full dilution would put at $5.9/share. If we use say $5 for pre-issuance, then cap raise/debt paydown implies a drop to $4.75. So seems like Mr. Market is putting a decent risk-premium into recent announcements - clearly the CFO was whacked because of not being clean with the bad receivables. Either one believes that the bones are out of the closet and the new board and (possibly new) management get the gig or not. The issue I am grappling with now is are the rights a better buy or the equity given current price.
    Mar 11, 2015. 10:11 AM | Likes Like |Link to Comment
  • Denbury Resources: Built To Survive [View article]
    reserves for '14 were effective flat although PV-10 went down due to a wider differential (they use TTM average). Of course, with oil down considerable for '15 we will see reserves down and PV-10 by a decent amount i imagine.
    Mar 2, 2015. 10:53 AM | Likes Like |Link to Comment
  • Denbury Resources: Built To Survive [View article]
    true - they have floods that are baking that wil come on line but better to keep it in the ground if u do not have a lot of debt to service...unfortunately they have decent interest expense but fortunately no maturities until 2021
    Mar 2, 2015. 10:52 AM | Likes Like |Link to Comment
  • Denbury Resources: Built To Survive [View article]
    i agree plus they have a decent amount of mature fields that haven't undergone floods that have low declines...i am using about 10% at zero capex...might be a bit high but conservative
    Mar 2, 2015. 10:50 AM | 1 Like Like |Link to Comment
  • Denbury Resources: Built To Survive [View article]
    no plan to increase dividend in 2015 so still at 25c or 3%
    Mar 2, 2015. 10:49 AM | Likes Like |Link to Comment
  • Denbury Resources: Built To Survive [View article]
    Just to be clear. When we stated "...additional cost savings (with lag) down to the lower $30s/boe..." those are non-interest cash costs. When including interest ~6/boe and depletion ~22/boe, their "earnings" breakeven will be about $60-62/boe without hedges.
    Feb 27, 2015. 04:20 PM | Likes Like |Link to Comment
  • Teekay Tankers: The Good News Keeps On Floating In [View article]
    rates and earnings were a bit disappointing to me. Rates were below Clarkson average for Q4 and Q1 to date. Revised down my CAD to ~$1.25 for 2015 and earnings 65c/share. So currently trading at about 9-10x fwd PE. I am still using a 20% drop in TCEs for Q2/3 which may not occur with low crude price/tanker storage demand - so playing it conservative. Modestly cheap here still and still maintaining price target of $9 given '16 earnings in the $1+ range
    Feb 24, 2015. 11:24 AM | Likes Like |Link to Comment
  • Teekay Tankers: The Good News Keeps On Floating In [View article]
    i don't know. we're up 100% from the low so doesn't seem like a headache to me.
    Feb 14, 2015. 10:02 AM | 1 Like Like |Link to Comment
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