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Jett Dueitt  

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  • A Deeper Look Into Halcon's Earnings [View article]
    Jonathan,

    HK can get the gains I am forecasting production without TMS, and with their same rig count and D&C budget as last year. TMS would just be a boost to those gains. Granted, they really need a 3rd core play because what they have currently, they only have about a 10-15 year drilling inventory. I'd like to see a 3rd play come to fruition. I think TMS is it.

    Thank you Jonathan
    Mar 28, 2014. 11:23 PM | 1 Like Like |Link to Comment
  • A Deeper Look Into Halcon's Earnings [View article]
    In short,

    1. They don't need to pay the debt, the debt will eventually be sold w/ the company.
    2. Their debt load is not growing. Hence the asset sales and most likely JV opportunity, there is no need to raise any more debt. HK will become FCF positive from existing production in mid '15. Their 450m asset sale gets them close to break even this year. The JV in TMS will get them through the final stage of burning cash.
    3. They will very easily grow into their "debt level" by increasing production the next 3 years as they go from producing 40k/d BOE to 70+. Do the math...it doesn't require a rig increase either.
    4. If you wish this company operate debt free you are missing the big picture. Their plan was simple:

    Phase 1 - lever up and grow production quickly
    Phase 2 - de-lever and pick core growth spots, sell off non core
    Phase 3 - Focus on FCF
    Phase 4 - sell the company

    We are currently finishing off phase 2 and about to enter into phase 3.
    Mar 11, 2014. 12:19 AM | 3 Likes Like |Link to Comment
  • A Deeper Look Into Halcon's Earnings [View article]
    GI,

    The facts are that HK has a 10-12+ year drilling inventory at current rig counts and can grow production 25-30% with those rig counts for the next 3-5 years. The company will very easily grow into its debt burden. The only "negative" with HK is that its 3rd core position is an early stage play. They are 1-1 right now. El Halcon has been wildly successful, and the Utica has flopped. TMS has potential.
    Mar 5, 2014. 12:19 AM | 1 Like Like |Link to Comment
  • A Deeper Look Into Halcon's Earnings [View article]
    Sail,

    Those who harp on the company's debt prospects know very little of either running a business or how E&P companies operate in my opinion. The debt coming due in 2020+ will almost undoubtedly be refinanced if it gets to that point and the company sold. By the 2018-2019 HK will be in a very different place, and interest rate (depending on market conditions) will likely reduce dramatically. Debt is not an issue, I agree with you.
    Feb 27, 2014. 07:52 PM | 1 Like Like |Link to Comment
  • A Deeper Look Into Halcon's Earnings [View article]
    Jonathan,

    I think a 20x multiple in 2016-2018 is very reasonable for HK and my thoughts for the following are as follows:

    1. They will be turning FCF positive and can internally fund all future development plans.
    2. They will have a natural 3-5x premium built into the stock due to Floyd's comments and open dialogue about selling the company.
    3. Production growth will ramp significantly in the outer years once FCF starts to continually hit in the black.
    4. A normal P/E for a growing E&P right now is 14-18x.

    As for the debt, I agree with you 100% on the debt. It is a non issue so long as oil prices stay above $70.
    Feb 27, 2014. 07:50 PM | 2 Likes Like |Link to Comment
  • Halcon Resources: Dilution Spree Is Going On, Fundamentals Starting To Weigh On The Stock [View article]
    1. That acquisition was completed in 2012, had nothing to do with growth from Q1'13 to Q2'13.

    2. The metrics you speak of certainly mean a lot, but the comparisons do not. You are comparing HK who is growing 50-75% YoY to companies struggling to grow 10%. Does LNKD get valued the same way MSFT does? Does AMZN get valued the same way TGT/WMT? Does SODA get valued the same way KO/PEP do? Do you value TSLA on the same metrics as F or GM?

    Get a clue.

    You completely miss the entire argument here. HK is in the early stages of hyper growth, by late 2014 they will be FCF positive give or take their drill schedule and oil prices.
    Aug 12, 2013. 11:05 PM | 2 Likes Like |Link to Comment
  • Halcon Resources: Dilution Spree Is Going On, Fundamentals Starting To Weigh On The Stock [View article]
    HK's production rising has nothing to do with acquisitions. They produced ~26-27k BOE/d last q and are right now ORGANICALLY producing 35k BOE/d. By Q4 they will exit likely producing around 45k BOE/d. Thats organic growth through the drill bit, not through acquisitions. They only made acq to replace the divested BOE in non core areas.

    You completely miss the point...again, find me a company growing BOE/d as fast as they are and compare them to that company.

    Until then, keep using ridiculous metrics to compare more mature companies to a early stage growth company. By your logic, we should be comparing LNKD and FB to MSFT and IBM. There is a REASON guys pay more for growth, regardless of fundamentals.
    Aug 12, 2013. 03:30 PM | 6 Likes Like |Link to Comment
  • Halcon Resources: Dilution Spree Is Going On, Fundamentals Starting To Weigh On The Stock [View article]
    1. "Due to the fact that a significant amount of the total production is natural gas liquids, the company's IRRs in this play are not high."

    El Halcon is 90-95% oil...not NGL

    2. I know I've said this in your articles before...You cannot compare HK right now to more mature companies. The reasoning is VERY simple...growth. Take just the numbers from your last report to this report, here is the breakdown in BOE growth (QoQ essentially).

    Halcon = 35%
    Whiting = 5%
    Continental = 11%
    Oasis = 0%
    Kodiak = 8%
    Lightstream = (5%)

    So in a nutshell, if you want to compare apples to apples you have to find another very early stage growth E&P with the production growth profile that HK has. You most likely will not find that because no one has the ability to consistently go to the debt markets to get funding for D&C and lever up like this if you don't have a very experienced CEO like Wilson.

    Simple math tells you that HK will grow into their valuation/debt levels. Thats why I think this is not a near term story, more so on the back half of '14 / '15 we should start seeing material results.

    As for your 4.50 PT.... please provide your calculations to get that number, curious to see how you come up with it. The most logical article posted on HK to me with a break down seemed to be this one:

    http://bit.ly/15sEfrH
    Aug 11, 2013. 11:18 PM | 12 Likes Like |Link to Comment
  • Bakken Update: HK Misses But Reports Record Initial Production Rates [View article]
    Large portion of their debt is due in 2020+...debt is not an issue.
    Aug 5, 2013. 03:31 AM | 1 Like Like |Link to Comment
  • Halcón Resources: $300 Million Convertible Offering - Quick Read [View article]
    The only thing you have accomplished is you have proven you do not know how to truly value a start up E&P company. Regardless of your "following", regardless of my experience....you keep shorting, I'll keep buying and in 2-3 years we'll see who's right.
    Jun 16, 2013. 09:30 PM | 2 Likes Like |Link to Comment
  • Halcón Resources: Bakken And Eagle Ford Excel, Woodbine Lags, Utica Remains To Be Proven [View article]
    You are valuing them against mature companies with production profiles that are growing no where near what HK's is. HK will grow @ 100% this year and in 2014. Probably 40-45% in 2015.

    In 2015 you will see a more normal sense of production and FCF.

    JMO, but traditional comparisons do not work, HK trades at a premium because of its growth profile. You can't match it up to a company growing BOE/d at 10-12% and expect it to be on par with a company growing @ 100%.
    Jun 11, 2013. 05:22 PM | 5 Likes Like |Link to Comment
  • Halcón Resources: Bakken And Eagle Ford Excel, Woodbine Lags, Utica Remains To Be Proven [View article]
    In other words...you haven't put in the work, you don't know about startup E&P and you are deflecting? The size of my following doesn't mean anything, nor does my length of investing background.

    Im in the oil industry, I am a drilling consultant. If anything, that gives me way more knowledge and credibility than you on the matter. The truth is, I've modeled the drillout schedule for HK...you should do the same. Then net back to current and it paints a far better picture than your $4 target.

    Can HK go to 4? Yes...heck they can go to 2.50 or 3.00. There is inherent risk when you lever up a commodity company.
    Jun 11, 2013. 04:47 PM | 5 Likes Like |Link to Comment
  • Halcón Resources: Bakken And Eagle Ford Excel, Woodbine Lags, Utica Remains To Be Proven [View article]
    I see where you are coming from, but the El Halcon results have improved a great deal since those slides were released. Just something to watch. We can agree to disagree!! I think HK is a solid bet for the next 2-3 years. If it dips below 5 I'll be buying more.
    Jun 11, 2013. 03:42 PM | 3 Likes Like |Link to Comment
  • Halcón Resources: Bakken And Eagle Ford Excel, Woodbine Lags, Utica Remains To Be Proven [View article]
    Them moving money to El Halcon has nothing to do with seismic. It has everything to do with El Halcon is just a better economic play right now. Until HK finds the sweet spot in Woodbine, its better to shift resources to higher IRR players. Which is what they are doing.

    Woodbine is a solid play, nothing earth shattering.

    Halcon has the potential to be really lucrative.
    Jun 11, 2013. 12:21 PM | 4 Likes Like |Link to Comment
  • Halcón Resources: Bakken And Eagle Ford Excel, Woodbine Lags, Utica Remains To Be Proven [View article]
    Again, you clearly lack fundamental knowledge of startup E&P companies. In your articles you have proven as much, by valuating and comparing HK to traditional and more mature E&P companies. HK has essentially been in business for about 12 months.

    I urge you, build an excel spread sheet and model out the FCF for '13/'14/'15. Use the same CAPEX for this year, same # of wells drilled guidance for each year (even though they will ramp in '15).

    The truth is, you have not done that...if you would have, you would see that it will take HK 18-20 months to become FCF positive due to their heavy D&C budget. They could very easily grow within FCF but are opting not too. Rightfully so, oil is in the 90s and they hedge on an 18/24 month rolling basis. Its not a hard concept to grasp. They are drilling wells for 6-9 million, paying for them in 2-3 months and recouping that money in 18 months give or take after royalties, taxes, and working interests. It takes time to become FCF positive.

    I'm not saying their isn't risk to HK, of course there is...but you have shown a vast misunderstanding of how to value a startup E&P.
    Jun 11, 2013. 12:18 PM | 5 Likes Like |Link to Comment
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