Anadarko And Phillips 66: Fundamental Improvement Continues [View article]
Interesting article. Anadarko is clearly doing very well. Have you looked at Austex? http://seekingalpha.co... - it is growing extremely fast and trades at a much lower cash flow multiple than APC
Wisconsin Energy: A High Growth, Fundamentally Strong, Low Beta Pick For My Dividend Portfolio [View article]
Interesting article, I'm inclined to agree with Craig. I think if you're looking at getting into the energy space, it probably makes more sense to go smaller and higher growth, as there are more compelling valuations there - http://seekingalpha.co...
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
I should have also discussed proved reserves - Austex now has SUBSTANTIALLY higher proved reserves than Osage and Red Fork, but has a substantially lower enterprise value than both of them.
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
All three of the companies have comparable de-risked acreage vs total acreage proportions, it was just more complicated to go through each of their specific acreage positions and discuss the level of development across them.
Buying American Oil Cheap From Canadian Companies [View article]
Yeah, Gale Force has not done well to date; they had a similar miss to SCS. However their base production decline rate is low and their reserve value (and cash flow) is high, so there is a lot of value there despite the low stock price.
One lesson I learned from my Gale Force investment is to invest in companies that are already achieving success in what I am projecting they will do going forward. So I've refocused on Austex Oil, which has already drilled 20 successful wells in its core area, and has another ~280 wells to drill there. All high rate of return, and leading to substantial production growth.
SCS hasn't shown that they've turned the corner yet. Its not even 100% clear what their problems are, although I think I may have narrowed them down to a few possibilities, none of which are promising from an equity value perspective.
Canadian Resource Play Economics - Where AusTex Fits In [View article]
The market isn't even giving them credit for their core 6,000 net acres in Snake River (Oklahoma) - they have almost $100 mm in proved reserve value, and an updated report should be coming out soon with a substantially higher value, versus a ~$55 mm market cap. When its trading at a premium to its 1p value, then it makes sense to start parsing acreage. Until then, it seems absurdly cheap.
Buying American Oil Cheap From Canadian Companies [View article]
To highlight how big of an issue this is, they were projecting $60 million in 2012 cash flow, and instead are now projecting $24-30 million in 2012 cash flow. Whoops.
I'd recommend taking a look at this - http://seekingalpha.co... - I am focused on the companies earning the highest returns on invested capital and that are already achieving rapid production growth, to avoid HUGE disappointments like SCS...
Look at page 3. The company substantially cut its projected production but only cut its capex marginally. It projected over 3,000 boepd for 2012, and then cut to 2,200 boepd. And it projected $67mm in capex, and cut that to $59-60mm.
There are 4 ways this could have happened. 1) their new wells are way less productive than they expected. 2) their existing fields are declining much more rapidly than expected. 3) their new wells cost way more than expected. or 4) a number of their wells are shut in.
Reason #4 is the least likely, because it would have been a material event that they would have had to report. Also, reason #3 isn't very likely, as service costs have been dropping. So reasons 1 or 2 are the most likely, and both are scary from a valuation perspective.
Brookfield Asset Management Has Some Explaining To Do To Second Wave Shareholders [View article]
Devon, what do you think happened here? Do you think SCS had an asset quality issue, a reserves issue, are running up against their debt covenants, etc? This situation seems odd.
Do you have an estimate of what their current production is, how much debt is outstanding, and how much cash the company is holding?
I've tried hard to find investments that would avoid blow-ups like SCS, but managed to have one with Gale Force (albeit "only" down 65%). It'll be interesting to see if AusTex is able to navigate into positive territory on the TSX (it is uplisting soon) without getting hit like SCS and others. I'm optimistic that having top-decile drilling economics will help (http://seekingalpha.co...) - do you think maybe SCS's returns from their wells were insufficient?
SandRidge Energy: Activists Win, Why Is The Stock Down? [View article]
Capex deployed correctly creates value for E&P companies. Look at the Rosetta/Comstock transaction announced today. Rosetta is paying ~$200,000 per boepd, and Comstock is going to continue to deploy capex until the asset is handed over to Rosetta.
One consideration here - look at the recent CHK/Sinopec transaction. It is not a favorable comp for SD, and if it sold the whole company at that price TPG would not make money from its position.
SandRidge Energy: Activists Win, Why Is The Stock Down? [View article]
Agreed, but there are other similar but more attractive (in my opinion) investments out there that seem likely to do better sooner - http://seekingalpha.co...
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
The production levels and capex tell the story best, I think. Austex has substantially more oil production than Osage, and will have even more production than Osage at the end of 2013. Both are good companies with good acreage, but Austex is cheaper, has more well results on its acreage (less risky), has more production (more cash flow also should translate to less risk), and is growing faster.
Royalty Trust Wealth Destruction And Opportunity Update [View article]
Unfortunately I can't comment publicly at the moment, but I can say I haven't sold a share of stock below 30 cents, and only sold a few thousand shares above 30 cents.
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
Doxa is too small to be comparable, their production likely doesn't cover their G&A expense and they are non-op on the western side of the Nemaha uplift. Osage and Austex have had much better results on the eastern side.
Anadarko And Phillips 66: Fundamental Improvement Continues [View article]
Wisconsin Energy: A High Growth, Fundamentally Strong, Low Beta Pick For My Dividend Portfolio [View article]
Harvest Natural Resources: Does Share Price Drop Present An Opportunity? [View article]
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
Buying American Oil Cheap From Canadian Companies [View article]
One lesson I learned from my Gale Force investment is to invest in companies that are already achieving success in what I am projecting they will do going forward. So I've refocused on Austex Oil, which has already drilled 20 successful wells in its core area, and has another ~280 wells to drill there. All high rate of return, and leading to substantial production growth.
SCS hasn't shown that they've turned the corner yet. Its not even 100% clear what their problems are, although I think I may have narrowed them down to a few possibilities, none of which are promising from an equity value perspective.
Canadian Resource Play Economics - Where AusTex Fits In [View article]
Buying American Oil Cheap From Canadian Companies [View article]
I'd recommend taking a look at this - http://seekingalpha.co... - I am focused on the companies earning the highest returns on invested capital and that are already achieving rapid production growth, to avoid HUGE disappointments like SCS...
Buying American Oil Cheap From Canadian Companies [View article]
Look at page 3. The company substantially cut its projected production but only cut its capex marginally. It projected over 3,000 boepd for 2012, and then cut to 2,200 boepd. And it projected $67mm in capex, and cut that to $59-60mm.
There are 4 ways this could have happened. 1) their new wells are way less productive than they expected. 2) their existing fields are declining much more rapidly than expected. 3) their new wells cost way more than expected. or 4) a number of their wells are shut in.
Reason #4 is the least likely, because it would have been a material event that they would have had to report. Also, reason #3 isn't very likely, as service costs have been dropping. So reasons 1 or 2 are the most likely, and both are scary from a valuation perspective.
Brookfield Asset Management Has Some Explaining To Do To Second Wave Shareholders [View article]
Do you have an estimate of what their current production is, how much debt is outstanding, and how much cash the company is holding?
I've tried hard to find investments that would avoid blow-ups like SCS, but managed to have one with Gale Force (albeit "only" down 65%). It'll be interesting to see if AusTex is able to navigate into positive territory on the TSX (it is uplisting soon) without getting hit like SCS and others. I'm optimistic that having top-decile drilling economics will help (http://seekingalpha.co...) - do you think maybe SCS's returns from their wells were insufficient?
SandRidge Energy: Activists Win, Why Is The Stock Down? [View article]
One consideration here - look at the recent CHK/Sinopec transaction. It is not a favorable comp for SD, and if it sold the whole company at that price TPG would not make money from its position.
SandRidge Energy: Activists Win, Why Is The Stock Down? [View article]
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]
Royalty Trust Wealth Destruction And Opportunity Update [View article]
Mississippian Pure Play Comparative Valuation - Osage, Red Fork And AusTex [View article]