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Jim Wallingford  

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  • Get Ready For The Latest Stock Bubble To Go Pop! [View article]
    Wow, I have to buy this guy's book! Look at his uncanny predictions:
    "In 2000, based on his forecast that economic growth would continue throughout the 2000s, Dent predicted that the DOW would reach 40,000, a prediction which was repeated in his 2004 book. In his book, he also predicted the NASDAQ would reach 13,000 - 20,000."

    "His 2011 book goes on to suggest consumer spending will begin to plummet in 2012 with the Dow bottoming out somewhere between 3,000 and 5,600 in 2014."
    From Wikipedia
    http://bit.ly/1GIRTeY

    Sure I could fill a book with these crystal ball strikeouts, but you get the idea.
    Mar 22, 2015. 10:31 PM | Likes Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    You're so right Edward. I was thinking of doing an article about Google being secretly owned by the mob in order to take over the world or maybe something about Netflix counting robots and dead people as subscribers. What do you think?
    Feb 7, 2015. 06:47 PM | 3 Likes Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    Here is an excerpt from Morningstar: "Rising costs, operational unreliability, and a recent accounting debacle continue to challenge Penn West. We
    assert that the company's land base is simply too broad
    for it to manage efficiently. The company has ample
    acreage it could shed without significantly compromising
    near-term production growth. The firm's drilling inventory
    sits at more than 20 years, well in excess of what investors
    are willing to pay for, in our opinion." (Jason Stevens, Dec. 4, 2014)
    They give the company 4 stars (5 being the highest) and call it "Undervalued" with a "fair value" of US$2.50.
    I thought the comment about being able to sell acreage without affecting production was interesting. That implies a possible source of cash to keep covenants within bounds. In addition, Morningstar, on the bullish side, points to new management committing to "improving return on invested capital" and the company's quality acreage in some areas that should provide increased production. On the bearish side they cite a cost squeeze on the exploration side, the lack of increases in reserves through drilling new wells and acquisitions that have not added value to the company.
    Jan 31, 2015. 06:11 PM | 4 Likes Like |Link to Comment
  • The Media Is Dead Wrong About Oil Supply And Demand [View article]
    Great article, Jeff. The short-covering rally on Friday might have been the bottom but that's doubtful. A move over $50 would probably see the shorts back at work. For a one year time frame for price recovery in the oil market one would look for oil and gas stocks to move higher in the next three to six months. XOM and CVX charts look like a triple bottom starting in October. If oil really sinks, they could break below those levels, of course. Valuations do look attractive at these levels for long-term investors. A dollar-cost averaging strategy might work well here, buying when oil rallies and when it slumps. If your last buy is at the bottom or at the breakout, you should do well. And collect the dividends along the way.
    I like ECA at these prices and will be submitting an article on the company. Incidentally, I'm long ECA.
    Jan 31, 2015. 05:47 PM | Likes Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    Let's just make one thing clear: Penn West contacted their bondholders regarding the POTENTIAL covenant breaches. The creditors did not call them.
    Jan 28, 2015. 12:11 PM | 3 Likes Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    From Canadianinsider.com

    Dec 12/14 Dec 11/14 Allard, James Edward Control or Direction Common Shares 10 - Disposition in the public market -950 $2.56
    Dec 12/14 Dec 11/14 Allard, James Edward Control or Direction Common Shares 10 - Disposition in the public market -7,500 $2.56
    Dec 11/14 Dec 11/14 Brookman, George Homer Direct Ownership Common Shares 10 - Acquisition in the public market 1,600 $2.74
    Dec 11/14 Dec 11/14 Brookman, George Homer Direct Ownership Common Shares 10 - Acquisition in the public market 900 $2.74
    Dec 11/14 Dec 11/14 Byrdson, John Direct Ownership Common Shares 10 - Acquisition in the public market 50,000 $2.29
    USD
    Dec 11/14 Dec 10/14 Byrdson, John Direct Ownership Common Shares 10 - Acquisition in the public market 100,000 $2.32
    USD
    Dec 1/14 Dec 1/14 Byrdson, John Direct Ownership Common Shares 10 - Acquisition in the public market 150,000 $3.33
    USD
    Nov 27/14 Nov 27/14 Dyck, David Allan Direct Ownership Common Shares 10 - Acquisition in the public market 11,650 $4.29
    Nov 20/14 Nov 18/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 2,500 $4.75
    Nov 18/14 Nov 14/14 Dyck, David Allan Direct Ownership Options 50 - Grant of options 250,000 $4.83
    Nov 18/14 Nov 14/14 Sweerts, Andrew Francis Direct Ownership Options 50 - Grant of options 130,000 $4.83
    Nov 12/14 Nov 12/14 Brookman, George Homer Direct Ownership Common Shares 10 - Acquisition in the public market 2,000 $4.92
    Nov 12/14 Nov 12/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 10,000 $4.75
    Nov 7/14 Nov 7/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 5,600 $4.98
    Nov 7/14 Nov 7/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 4,400 $4.98
    Nov 7/14 Nov 6/14 Dyck, David Allan Direct Ownership Common Shares 10 - Acquisition in the public market 42,000 $4.74
    Nov 6/14 Nov 6/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 4,000 $4.68
    Nov 6/14 Nov 6/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 6,000 $4.67
    Nov 6/14 Nov 6/14 George, Richard Lee Direct Ownership Common Shares 10 - Acquisition in the public market 20,000 $4.70
    Nov 6/14 Nov 6/14 Roberts Jr, David Emmitt Direct Ownership Common Shares 10 - Acquisition in the public market 5,000 $4.08
    USD
    Nov 6/14 Nov 6/14 Smith, James Cameron Control or Direction Common Shares 10 - Acquisition in the public market 400 $4.65
    Jan 28, 2015. 11:58 AM | 1 Like Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    Dar: I don't think there is any indication that PWE is talking to its creditors to head off a liquidity crisis. A cash crunch could ensue if oil and gas sink to much lower levels than today and stay there for a couple of years. Most observers don't expect that to happen but rather a move higher in the last half of 2015. They could be out to lunch, of course.
    According to Penn West's Q3 MD&A the combined operating costs for their 100k boe for the nine months ended Sept. 30 was C$20.74/boe. They can keep pumping, albeit with a shrinking margin. An impairment of their proven reserves is obviously going to show up in their annual statements. Let's say 50%. That's new proven reserves of 200 mil boe. That's C$4.75/boe based on market cap of C$950 mil. TLM got C$8.75/boe excluding debt based on 1.1 bil proven reserves as at Dec. 31, 2013. PWE still looks like good value based on reserves.
    Jan 24, 2015. 04:42 PM | 10 Likes Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    I haven't seen anything saying the bondholders are threatening Penn West. It appears that the company approached the creditors rather than the other way round. The debt, as you say, isn't onerous. But a deal is a deal, i.e., covenants are obliged to be met. Bondholders may be looking for a little more in interest from PWE or perhaps just want to outline a timetable for coming back into compliance. Whatever the case (more details in mid-March) it is extremely unlikely that the creditors would demand that the bonds be paid in full due to the covenant breach. I think you're correct about investors waking up. I'm just unsure about "soon". PWE is already trading at distressed levels and a long period of low oil and gas prices is only going to put them under more pressure from both creditors and investors.
    Jan 24, 2015. 03:55 PM | 3 Likes Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    Thanks to everyone for your comments. I am long PWE and wouldn't be surprised if a bidder turned up given the 415 million barrels of proven reserves and 625 million proven and probable. These could be reduced due to the oil swoon but they still have a lot of the stuff. Any potential buyer might wait till the pain gets severe, of course. Or no buyer shows up. A rough takeover price would be C$7-$8/share versus today's close of C$1.96. I base this on the TLM purchase at C$9/proven boe: C$9 x 415 mil = C$3.735 bil/497 mil shares=C$7.51/boe. And the buyer would have to put up only 25% more for debt, rather than the approximately 50% that Repsol pledged.
    If anyone has a different takeover scenario please present it.
    Just remember it's never a good idea to invest/speculate strictly on a possible takeover. Unless you have insider info, of course. If you do, please share! Privately, of course. It worked for SAC Capital. Why not us?
    Jan 23, 2015. 03:28 AM | 5 Likes Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    I didn't include any forecasts for drilling costs, 7422. I assumed that the company had included those in its reduced cash flow forecast for 2015. If the oil price stays low for longer then the drilling rates will drop significantly. But so will oil revenue, of course.
    Jan 23, 2015. 02:44 AM | 2 Likes Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    I agree, Blue. More dilution would probably be a sign of desperation. I see that they are already talking to their bondholders about some relaxation of the debt covenants http://bloom.bg/1CkXOqi. The CEO called the move "prudent and proactive", adding that they continue to seek asset sales. Obviously they believe that there's a real possibility that the covenants will be violated.
    The article states that the covenant for Senior debt/EBITDA is based on TTM cash flow. Cash flow for the 9 months ended Sept. 30 was C$766 mil so cash flow for the TTM ending Dec. 31 will be in compliance. Violation by the end of the first or second quarter of 2015. I expect a dividend suspension to be announced in March if not sooner. The bondholders will insist on it.
    Jan 23, 2015. 02:39 AM | 5 Likes Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    Would you mind sharing with the rest of us something with a little more weight than your doomsday one-liner, 1Great? We welcome alternate points of view as they cause us to examine our own thinking.
    I don't really like doing this kind of thing but you have sort of brought it on yourself by your fact-free statement:
    From your Nov 26 comment on a Seadrill article
    "Well and that's why these guys got creamed today. Penn West you guys are next. Safe my left testicle. The truth however is that now Seadrill and shortly, Penn West will be priced to Buy for sure. At $15-16 you've got to be thinking it's worth a shot or has bottomed here. Penn West is off a lot but I figure that the correct entry point for Penn West is $3.75-4.00."
    I guess you've gone over to the other side, i.e., SHORT?
    Write something that makes the case for a "Penny Stock". We'll all read it with interest.
    Jan 23, 2015. 02:01 AM | 1 Like Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    Yes, cash, god bless Mr. Poloz and the sinking oil price. At 9 CDN cents above PWE's assumption, it translates into an additional C$162 mil in cash flow.
    Jan 23, 2015. 01:44 AM | 1 Like Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    Very few saw the oil crash, Venture. So I'm guessing that many of those articles were based on oil price projections that, to understate in the extreme, were a bit off. We will also get the DOA articles with a vertical move like this. Certainly on a reserve basis PWE's price is just wrong. Oil and gas are the key, as you state, but it's unlikely we've seen the bottom for oil at least.
    Jan 23, 2015. 01:40 AM | 1 Like Like |Link to Comment
  • Penn West Sensitivity Analysis [View article]
    I stand corrected, TD. I don't know why I have a British accent in my head when I hear that phrase. Thank you, Franklin, then. I hope PWE management will embrace Winston's "we shall never surrender"!
    Jan 23, 2015. 01:32 AM | 1 Like Like |Link to Comment
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