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  • Is U.S. Energy Going To Zero? Low Debt Is Not Enough To Survive [View article]
    An additional point on USEG. Most of their acreage is held by production, they don't have to drill. If an operator proposes a new well they can pass, and they still retain their working interest in future drilling locations. They simply don't have any large financial commitments that they are on the hook for.
    Jun 30, 2015. 08:28 AM | Likes Like |Link to Comment
  • Is U.S. Energy Going To Zero? Low Debt Is Not Enough To Survive [View article]
    You may have missed my article on the K.M. Ranch Eagle Ford play because it was published under Contango (MCF). Here it is:

    http://seekingalpha.co...
    Jun 29, 2015. 03:26 PM | 2 Likes Like |Link to Comment
  • Is U.S. Energy Going To Zero? Low Debt Is Not Enough To Survive [View article]
    Thanks for linking my article to yours.

    There is no doubt the trading action in U.S. Energy's stock has been horrendous. But the company is simply not a near or mid-term bankruptcy candidate. They have stable production of 900 Boepd without any additional new drilling in 2015.

    Unless oil prices drop $15 to $20 per barrel from here you can simply throw out the Q1 income statement. Most of their production is in the Bakken, and prices there traded into the low $30's for part of the first quarter. Prices in the Bakken have since recovered, and in June traded close to West Texas Intermediate prices near $60 per barrel. This will be reflected in second quarter 10Q, which will show positive cash flow.

    USEG's best asset is the Eagle Ford on the K.M. Ranch. EXCO Resources has drilled very successful Eagle Ford wells nearby. USEG's partner Contango plans to spud their own Eagle Ford well later this year. If that well is successful, then USEG can book an additional 2 to 3 million barrels of proven reserves just from the K.M. Ranch. That alone would be worth much more than all of their debt.

    Without those Eagle Ford wells management stated the current PV-10 value at current strip prices is in excess of $40 million. That doesn't include their potential recent success in the Eagle Ford/Austin Chalk with $1.5 million vertical wells.

    Additionally, they own all sorts of things that can raise cash. First, they own their headquarters free and clear. The building is two floors and they occupy one floor and lease out the other. The building can be sold, or mortgaged to raise cash.

    USEG doesn't have any outstanding bonds beyond their bank debt. There is an active market for second lien bonds and they could tap that for liquidity if necessary.

    Your article does a nice job of highlighting the first quarter 10Q. Fortunately for USEG shareholders, that is not the whole story!
    Jun 29, 2015. 03:23 PM | 2 Likes Like |Link to Comment
  • Natural Gas Production Has Big Downward Revision By EIA [View article]
    Down two more rigs...seems to have stabilized for the time being:

    http://bit.ly/1NaebtG
    Jun 19, 2015. 02:04 PM | Likes Like |Link to Comment
  • EIA Puts Out Conflicting Natural Gas Production Forecasts [View article]
    Down another 7 rigs:

    http://bit.ly/1G0gkFL
    Jun 5, 2015. 02:42 PM | Likes Like |Link to Comment
  • Natural Gas Production Has Big Downward Revision By EIA [View article]
    Thanks for posting this. I just became aware of it.

    That doesn't change the thesis that the rig count has dropped so precipitously that production is rolling over. Like the unemployment report And GDP, I guess this data set is now subject to multiple revisions.
    Jun 2, 2015. 09:11 PM | 2 Likes Like |Link to Comment
  • Natural Gas Production Has Big Downward Revision By EIA [View article]
    I agree and appreciate your comments. I do think weather has been very mild so far in April and May and has slowed natural gas consumption. Not just in Texas, but also in Oklahoma and Louisiana. What I am focused on is not where we have been, but where we are going.

    We are at the five year average for storage. The price in the market is determined to minimize storage based on the belief we are over-supplied relative to demand. I expect demand to continue to grow throughout the rest of this year and next year. I also am of the opinion supply has topped out and is already declining. It's not just drilling that is down, it is also completions. Some operators let the rigs drill for a coupe of months until the contracts ran out rather than pay a penalty. But they have delayed completing those wells. So I think we have fewer wells coming online than the rig count implies. Also, I think some of the lower than expected production is real and not just maintenance.

    Let's just assume the current EIA numbers are close enough to being in the ballpark to accept them as a reference for discussion. And lets for argument sake assume that production is not declining, but is flat. Last year in April the EIA reported gross production was 76 Bcf/f. By August, the EIA reported gross production had risen to 80 Bcf/d. March 2015 production is in the 80 Bcf/d range. So, relative to last year supply will tighten 4 Bcf/d between April and August.

    Area Wyoming Other States3 Lower 48 States Alaska
    State Data4 U.S. Total
    Report Month Gross Withdrawals (Bcf/day) % Change from Last Month Gross Withdrawals (Bcf/day) % Change from Last Month Gross Withdrawals (Bcf/day) % Change from Last Month Gross Withdrawals (Bcf/day) % Change from Last Month Gross Withdrawals (Bcf/day) % Change from Last Month
    Mar-14 5.54 0.7 29.35 1.4 76.06 1.4 9.65 0.0 85.71 1.3
    Apr-14 5.39 -2.7 29.21 -0.5 76.64 0.8 9.24 -4.2 85.88 0.2
    May-14 5.41 0.4 29.97 2.6 77.59 1.2 8.46 -8.4 86.05 0.2
    Jun-14 5.43 0.4 30.37 1.3 78.15 0.7 8.41 -0.6 86.56 0.6
    Jul-14 5.42 -0.2 31.06 2.3 79.19 1.3 6.27 -25.4 85.46 -1.3
    Aug-14 5.30 -2.2 31.81 2.4 80.23 1.3 6.11 -2.6 86.34 1.0
    Sep-14 5.52 4.2 31.95 0.4 80.29 0.1 8.64 41.4 88.93 3.0
    Oct-14 5.50 -0.4 32.33 1.2 80.78 0.6 8.74 1.2 89.52 0.7
    Nov-14 5.52 0.4 33.25 2.8 81.61 1.0 9.41 7.7 91.02 1.7
    Dec-14 5.44 -1.4 34.66 4.2 83.43 2.2 9.73 3.4 93.16 2.4
    Jan-15 R 5.38 -1.1 R 32.56 -6.1 R 80.27 -3.8 9.41 -3.3 R 89.68 -3.7
    Feb-15 R 5.43 0.9 R 32.68 0.4 R 81.02 0.9 9.09 -3.4 R 90.11 0.5
    Mar-15 5.55 2.2 32.65 -0.1 80.78 -0.3 9.68 6.5 90.46 0.4
    Source: EIA-914 and EIA Natural Gas Annual

    Sorry for the format. Here is the link:

    http://1.usa.gov/y7PLBv

    My viewpoint is the market should adjust to this now. If I understand your viewpoint, the market will adjust when it shows up in the storage numbers. I think 3 out of the last 4 storage numbers were below consensus after running mainly above consensus throughout April. Let's throw the Memorial Day week out and see what the next couple of reports look like. If I'm right the market will detect noticeable tightening in the next few weeks.
    Jun 2, 2015. 12:26 PM | Likes Like |Link to Comment
  • Natural Gas Production Has Big Downward Revision By EIA [View article]
    Appreciate your insights. Just to play contrarian, I live in Texas and we just set a record for 26 straight days of rainfall. I also think we set a record for consecutive days when the sun didn't shine. Plus, maintenance for Nuclear plants has been lower than normal.

    On a different note, what is your assessment of the EIA Drilling Report predicting natural gas production will start to decline beginning in May? If accurate, wouldn't this slow down weather adjusted injections in the Summer and Fall?
    Jun 1, 2015. 01:57 PM | 1 Like Like |Link to Comment
  • EIA Predicts Natural Gas Production Starts Declining In May [View article]
    EIA Monthly Production Report has a massive DOWNWARD REVISION for February production:

    http://tinyurl.com/kkh...
    May 29, 2015. 05:12 PM | Likes Like |Link to Comment
  • EIA Puts Out Conflicting Natural Gas Production Forecasts [View article]
    Down another 10 rigs:

    http://tinyurl.com/qzd...
    May 29, 2015. 01:29 PM | Likes Like |Link to Comment
  • EXCO Resources: Can A Restructuring Succeed? [View article]
    This article should have been linked to XCO by Seeking Alpha. It contains a lot of info on EXCO relevant to Contango (MCF) who has nearby acreage in the Eagle Ford.

    http://seekingalpha.co...
    May 29, 2015. 10:47 AM | Likes Like |Link to Comment
  • Buy These 5 Small-Cap Oil Stocks With Low Debt Levels [View article]
    Here is the latest on Contango and USEG:

    http://seekingalpha.co...
    May 28, 2015. 01:46 PM | Likes Like |Link to Comment
  • EIA Puts Out Conflicting Natural Gas Production Forecasts [View article]
    Down another 3 rigs:

    http://bit.ly/1LtzNAv
    May 22, 2015. 01:10 PM | 1 Like Like |Link to Comment
  • EIA Puts Out Conflicting Natural Gas Production Forecasts [View article]
    The declining rig count indicates the EIA will predict a bigger daily decline in July. Also, other regions beside the seven followed by the drilling report are also declining.
    May 20, 2015. 09:01 AM | Likes Like |Link to Comment
  • EIA Puts Out Conflicting Natural Gas Production Forecasts [View article]
    The latest U.S. Rig Count down another 6 rigs.

    http://bit.ly/1FdbUe9
    May 15, 2015. 01:19 PM | Likes Like |Link to Comment
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