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Douglas E. Johnston

 
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  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    but i did look at shorting....puts are expensive in volatility terms and bid-offer is huge...and shorting shares are expensive ~5% fee...so one has to time it right but, as i discuss in the article, i don't expect a big drop just a continued grind lower
    Mar 19 08:30 AM | 1 Like Like |Link to Comment
  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    My CU PV-10 takes into account SU unit conversion in late 2015 (as well as the fact that once at zero, they provide no support).

    I think the reserve report is what it is. It is based on SD provided information and it is impossible to make an assessment without more details. That is why I rely wholly on the actual SDR production data to estimate. It does remind me of the cozy relationship between the credit agencies and the CDO manufacturers.

    "Personally I find drilling on locations different than those included in the reserve report as a positive event. Would you rather Sandridge drill dry holes?"

    what makes u say they were dry holes?

    So far, the track record on proved reserves has not been good and SDT's continued downward revisions, which is a bit further along in the process with older wells, is not a good omen.
    Mar 19 07:46 AM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    I used a type curve that matches all of SDR's production to date. And I also use $90/$4.5. Also note that $7.61 does not include all costs. The only way I get $7.61 is if I use a B-factor much higher than exhibited by the trust so far. Maybe their wells will have a hydro-carbon epiphany.

    "Shall we assume that the non discounted cash flows of around $15 per share by the independent oil and gas consultants are wrong?"

    in short, yes....
    Mar 19 07:41 AM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    are u suggesting PER has been a good investment? It IPO's ~18, has paid $6 in distibution, and sits at 12 now....I guess that is ok in your book
    Mar 19 07:37 AM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    i think it is hard to make a lawsuit against someone who is estimating a 30-year type curve based on a couple of years data...the statistical error is huge. And for that matter, are they simply relying on SD's type curve. I believe that SD's type curve and seemingly the one's they use for SDR's reserves have B factors that are way too high, and higher than what I've seen used for most well type curves (shale)
    Mar 19 07:33 AM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust II: Significant Downside Risk Remains [View article]
    @change.....yes - you are correct that those are the 3 issues. On #3 I think that someone could make a decent case, especially at jury trial. So it would not surprise me if we see a lawsuit and some kind of settlement - unfortunately, it probably means small beans for anyone who bought.

    i did a sensitivity analysis and find it hard to come up with anything more than in the low 6s pps that would pique my interest...that of course, hinges on my own desired IRR...personally, I am going to wait until the drill program is over and I've seen a few quarters of decline to get a better handle on the curve....

    Richards primary assumption is that their (SDR) PV-10 is accurate. I do not believe it is so.

    No - No positions. I was thinking about buying after the plunge and 1o-k release but came to the conclusion that it was not for me so I figured I'd at least publish and see what others thought.
    Mar 19 07:30 AM | 2 Likes Like |Link to Comment
  • SandRidge Mississippian Trust II: Analyzing Year-End Reserves [View article]
    Overall reserves are down 3.3 net of the 2.2 production ... as u state proved reserves are down 13.2%....PUD revision is down 2.2mn due to well performance...what is the other 1.1 from? They just picked bad locations vs what they assumed at end '12? Isn't that well performance too? or did they pick those bad locations on purpose

    I would caution using PV-10 from the reserve report to then predict an IRR....their assumed type-curve looks wildly optimistic based on production data in the trust.

    Also, SDR is following in SDT's footsteps so I see SDT's further revisions (with longer well data) a bad omen
    Mar 18 04:48 PM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust I: Large Downward Reserve Revision [View article]
    @okoil - thanks...from my analysis, it appears that the reserve engineers are working with a type curve similar to what SD has in their recent presentations with B factors of 1.4/1.8 (oil/gas) and EURs of 350-380. That is the only way I get the PV-10 to fit. But that does not fit the observed production data from the wells in the trust. So either the reserve engineers are simply getting a type curve from SD and applying it on a forward basis or they are basing there results on a much larger set of wells than just the trust well data....it does not appear that they are using the trust specific wells so I would deeply distrust any notion of PV-10 produced for these trusts
    Mar 18 09:47 AM | Likes Like |Link to Comment
  • Calumet Specialty Product Partners: Do The 2 Recent Acquisitions Threaten The Distribution? [View article]
    U r beating around the bush...u stated clmt yield is great while not recognizing that it is has nothing to do with returns...but to be honest I tire of the debate...good night
    Mar 17 09:06 PM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust I - PV-10 Update Reveals 'Pig In A Poke' [View article]
    And short a put too
    Mar 17 08:46 PM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust I - PV-10 Update Reveals 'Pig In A Poke' [View article]
    I did a report on SDR and one tidbit is that the wells they drilled in 2013 were not the wells they assumed would be drilled in their 2012 reserve report...talk about fishy....maybe SDT had the same phenomena...
    Mar 17 08:45 PM | 1 Like Like |Link to Comment
  • SandRidge Mississippian Trust I - PV-10 Update Reveals 'Pig In A Poke' [View article]
    Rusty ... My thoughts exactly...the outside reserve firms play the part of the credit agencies and the trusts the CDOs
    Mar 17 08:42 PM | 1 Like Like |Link to Comment
  • SandRidge Mississippian Trust I: Large Downward Reserve Revision [View article]
    One thing I have no knowledge of is what info do the reserve engineers work with to come to their conclusions....the relationship btw them and the e&p's reminds me of the credit agencies and the guys making the CDOs....a bit too chummy
    Mar 17 08:21 PM | 1 Like Like |Link to Comment
  • SandRidge Mississippian Trust I: Large Downward Reserve Revision [View article]
    One thing I gleaned out of sdr (Sdt sister trust) is that they drilled wells in 2013 that were not the wells that 2012 reserves were based on....
    Mar 17 08:08 PM | Likes Like |Link to Comment
  • SandRidge Mississippian Trust I: Large Downward Reserve Revision [View article]
    Good analysis as usual, Richard....thanks....I looked at sdr's recently revised pv-10 - report forthcoming - and I can't get a type curve to fit their production to date as well as their pv-10. So I am left concluding either their wells are suddenly going to have a hydrocarbon epiphany or there is something lacking in the reserve report...u can guess which side I come down on....i'm kinda surprised lawsuits are not poppin up like daisies...

    Doug
    Mar 17 07:42 PM | 1 Like Like |Link to Comment
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