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Douglas E. Johnston  

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  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    @rawenergy - thanks - i see what you are saying from the CC comments. I am just having a problem seeing such a large difference btw PV-10 and PV-15, if its net-net. If I calibrate to a PV-10 of 5.35 per well to get to $37.5mn, then just changing the discount rate to 15% gets me to $4.55/well or $31.85mn. Some cashflow assumptions are different for sure - although I've calibrated type curve to XCO's statements - but I can't see it making up the delta. So I'll have to do more digging.
    Oct 31, 2014. 12:07 PM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    just one note....the PV-10 is for the whole 100% net...the offer amount is for KKR's 75% of that....either way, the well results look quite good to me to get to that PV-10 but also it is unclear of the exact aging of the offer wells - e.g., if turned to sales at end of 1Q14 vs Jan...

    but, yes, i'd agree its a +tive
    Oct 30, 2014. 03:50 PM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    not sure justy. seems like they would have sold Marcellus a while back. They prob want to improve the properties a bit first - blocking out some acreage and getting a better handle on reserves. My guess is there are a lot of probable type reserves there and they basically want to wait it out for NG prices to go back up. Hence all the other deals etc. Unfortunately, so far it hasn't panned out but they still seem determined to basically bide time. how long they can wait is the question. Given where the strip is for 2015 - $3.65 and falling, things will be tough next year even with recent asset sale. My impression is E&Ps are being "forced" into hedging here and Mr market is charging a decent premium or iow, spot NG prices will probably average higher than $3.65 imo. The bankers seem like they are on their side with recent credit line up (50mn token gesture I guess) so seems like they can make it through. The one issue is that with oil now at $80 and flat futures curve, seems like they might not achieve KKR's drill return hurdle - how that all pans out will be interesting.
    Oct 24, 2014. 09:52 AM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    what do we think of that CHK deal? 13k/acre with 3.2Mmcfe of proved per. Would value XCO's Marcellus at 750-1.5bn depending on metric.
    Oct 16, 2014. 10:16 AM | Likes Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    yup - clearly price action indicates a major stop out across the sector. A lot of HFs got caught up in the $5 attractor theory given where the secondary was back stopped. I also think fear around (non small cap) funds selling given sub $5 threshold....
    Oct 16, 2014. 10:12 AM | Likes Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    agree- they still have over 60% 2015 production unhedged and they are still a natural gas company. and btw, the sale by CHK of their marcellus acreage for 5.4bn bodes will for XCO's position

    author is either misinformed or....
    Oct 16, 2014. 10:08 AM | Likes Like |Link to Comment
  • EXCO Resources: Interpreting A Cryptic Press Release [View article]
    hi Richard - as to your last point - the only "liability" is that if the PV-10 at the 1-year point is insufficient (along with first year carry) to reach the KKR drilling return, then KKR does not have to accept XCO's required offer. This only applies to wells drilled in the first year of the program I believe. So, if the strip curve is "too low" in 2015 (I judge we are close to the breakeven, right now) then it can be considered a blessing or a curse depending on your view. I believe XCO and KKR decide on the drilling program together each year and it ends in 2019 or when 240 wells in Area 1 drilled - so they can decide to choke back drilling.

    As to the CEO comment - i take it as they would use their shares as currency to get a CEO (with property) to come on board.
    Oct 14, 2014. 02:11 PM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    still only 1/3 fo 2015 production hedged so upside (and downside) is still there...those old call options are thorny
    Oct 14, 2014. 01:56 PM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    @papa - well we've certainly had our disagreements. Hope this one works out for both of us ...i've been nibbling at different option structures - basically lotto tickets....I take that statement about buying assets of a CEO as meaning they will use shares as currency to allow some "CEO" who has property to take a big stake in XCO - hence the sp reaction (dilution)...we'll see but this certainly will make a good mini-series...g/l
    Oct 14, 2014. 01:55 PM | 1 Like Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    FWIW, here is my current sum of parts analysis for XCO and a possible takeover price.

    Proved Reserves @ 1.45 mcfe = 1.6bn or ~$6/shr
    Net Liabilities = ~1.3bn = $4.70/shr


    UnProved (150k marcellus mostly) @3k/per acre = $1.65/shr


    KKR deal at 350mn = 1.3/shr


    so net I see a "book value" at roughly $4.25 give or take .50c


    I used $1.45/mcfe, lower than their recent HGI sale at $1.63, since HGI paid a premium for "known" results (they bot the 25% they did not own).


    KKR deal is lower than what XCO net paid because a) it was a bad deal and b) price-deck has changed.


    I can't imagine a deal done for less than $3.5 (a steal) or more than $5. I am guessing Doug Miller and friends (Boone, Cerberus again?) are looking to get it cheap.


    g/l


    dej
    Oct 10, 2014. 09:07 AM | Likes Like |Link to Comment
  • EXCO Resources: Why We Are No Longer Bulls [View article]
    In light of the recent price action, here is my current sum of parts analysis for XCO and a possible takeover price. i don't have time for a new article

    Proved Reserves @ 1.45 mcfe = 1.6bn or ~$6/shr
    Net Liabilities = ~1.3bn = $4.70/shr

    UnProved (150k marcellus mostly) @3k/per acre = $1.65/shr

    KKR deal at 350mn = 1.3/shr

    so net I see a "book value" at roughly $4.25 give or take .50c

    I used $1.45/mcfe, lower than their recent HGI sale at $1.63, since HGI paid a premium for "known" results (they bot the 25% they did not own).

    KKR deal is lower than what XCO net paid because a) it was a bad deal and b) price-deck has changed.

    I can't imagine a deal done for less than $3.5 (a steal) or more than $5. I am guessing Doug Miller and friends (Boone, Cerberus again?) are looking to get it cheap.

    g/l

    dej 10/10/14
    Oct 10, 2014. 09:06 AM | Likes Like |Link to Comment
  • EXCO Resources: What Just Happened? [View article]
    The sharks are circling
    Oct 9, 2014. 10:48 PM | Likes Like |Link to Comment
  • EXCO Resources: What Just Happened? [View article]
    xco's bonds have been trading off..they are 94 offered 50 up
    Oct 3, 2014. 02:21 PM | Likes Like |Link to Comment
  • EXCO Resources: What Just Happened? [View article]
    Richard. ... i wouldn't call it an investment ;-) We bot some long dated lottery tickets. I agree we should not make much of the hedging or lack thereof - they still only have 30-40% of 2015 anticipated prod. hedged depending on how you view their option positions. And the potential KKR oil buys are not hedged. It seems to me that the Wilbur premium finally has come out of the stock. It never should have been trading at $5-6+. I said that a year ago (pat, pat). Leo, the RBC guy, has actually been following the stock for a while and while his comments were a bit loose, the point is fact - they really don't make money at $4 ng. I think the bonds are interesting if u can get them closer to 10% yield. g/l
    Oct 3, 2014. 09:50 AM | Likes Like |Link to Comment
  • EXCO Resources: What Just Happened? [View article]
    Heh Richard, good article as always. I pin the equity value at somewhere in the $3.5 - $4 range, depending on what pricing assumptions are used. I think the fact that they kept the dividend, when they have cash flow needs, and then hedged NG at the probable lows was really the last straw for some. It's amazing to me the foolish mistakes they've made (although much blame on Miller). We bot some over the last two days as a speculative trade (mostly thru calls). Wish me luck!

    One thing: XCO is not obligated to buy the KKR interests. If they don't then KKR no longer needs to accept XCO future offers. It will be interesting to see what happens. I don't think they can really walk away given the price they paid on the land-equity. On a positive, at least they might not have to buy PV-10 at 100+!
    Oct 3, 2014. 09:18 AM | 1 Like Like |Link to Comment
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