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Lionel Yeo

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  • My Quest To Make $1 Million In 10 Years [View article]
    Yeah Edward, was that really necessary?
    Jan 6 11:00 AM | 17 Likes Like |Link to Comment
  • Is The Money Real? [View article]
    Hi Paulo,

    I know from personal experience that this is NOT sufficient. A few years ago, I represented a medium investment firm that had interests in a company called China Milk listed in Singapore. On the books, the company had $1.5B RMB of balances. Suspecting something wrong, we pressed the company to issue a dividend. The company responded saying that foreign cash controls prevented money from leaving China. We then issued a legal letter to request for bank statements of the money. What we received was a poorly copied fax statement showing some balance amount with a different name.

    The CFO continued to support the claim that they had the money, after which we threatened legal action if an immediate cash audit was not done by a reputable accounting firm. Suspecting the CFO couldn't answer the question, the firm began selling shares. On that Friday evening the CFO resigned. We then issued an email to the independent directors, of which one of them resigned on the Monday. The company was then suspended.

    Muddy water's is correct to point out faults. Specialist auditors are required to check cash amounts. Companies with suspected cash amounts should be forced to payout dividends. My favorite line is, show me the money!
    Nov 21 10:45 AM | 8 Likes Like |Link to Comment
  • King Coal Takes Another Blow To The Head [View article]
    I think the biggest motivator is the price of natural gas. Coal will rally once natural gas goes back up.

    I have been watching the prices and there was a quick spike last summer during the heat wave. Also winter 2012, mar 2013 has a spike in NG which showered a lot of ng coal switching.

    most producers have a lot of plant capacity available to switch to coal when prices swing around.
    Nov 15 02:57 PM | 7 Likes Like |Link to Comment
  • Penn West: When Will The Pain Stop? [View article]
    Hi Michael,

    Sorry, what is Leaps?

    I scanned the wire for information on why PWE dropped $1.00 but I don't see anything we didn't already know. It was projected to continue to divest pboe till about 95,000 boepd.

    As Brian pointed out, all the companies mentioned were down 50% or more before turning around. I recalled purchasing PGH around $4.00 when people were saying their thermal oil project was pie in the sky.

    I disagree with the 3-5 year horizon. The reason being that once sentiment changes in a stock, the share price runs before the main story. Its true that PWE does not have a hot story to charge their share price. Production will be rather flattish the next 3 years. But I am more interested in flow of funds and cutting debt.

    Enerplus has production over about 89k. So stabilizing around 95k boepd would not be too much of a concern.

    The divestment of 6,700 boepd was weighted 58% towards natural gas, and had a $20 cost pboe. So this is in line with PWE's strategy.

    So really a non-issue news there. I think save for any new developments, this is a good opportunity to pickup more position. I caution against a wait-and-see attitude. I had the idea on NAT at $7.15 and within 30 days it rose above $10.50. In my years in investment, I have given up picking bottoms and now adopt the same strategy I do when I go grocery shopping. If there's a sale below my target price I buy.
    Jan 23 08:38 AM | 5 Likes Like |Link to Comment
  • The Real Natural Gas Production Decline [View article]
    Are you sure he has been banned? That would be pretty right wing.

    I find the opinions here, whether I agree or disagree with them, a valuable source of insights completely different from mainstream. As long as a contributor does not post harmful or direct attacks, I think they should be allowed to continue.
    Feb 10 09:31 AM | 5 Likes Like |Link to Comment
  • What Seeking Alpha Is Doing To Prevent Paid Stock Promotion [View article]
    Anyone who reads anything published about a company needs to go home and do their own homework. This on SA or any other website.

    The contributors here do so as a service to the general public to lay out their analysis step by step and support it with facts. You, the reader must exercise you're judgement on what you feel is right or wrong.

    I feel that if a post is paid stock promotion, that other contributors and the editors should weigh in to look at the facts. I find SA a wealth of quality opinions to read through to get up to speed on any stock I am researching. Even those off the whack, crazy comments are excellent for understanding various opinions.

    The only factor which should and MUST be declared is if the author is receiving compensation. This is material information and must be considered when you read an article. SA is right to crack down on those who do not declare their interests elsewhere.
    Mar 28 08:54 AM | 4 Likes Like |Link to Comment
  • Penn West Continues To Execute Against Its Turnaround Plan [View article]
    Well written.
    I co-authored a white paper on natural gas calling the bottom in Apr 2013. Those fundamentals are definitely in play and NG will not drop below $4.

    I also wrote a piece on PWE, citing their poor performance due to natural gas prices where in 2008 they had 48% of their production in NG.

    A lot of investors have been caught and lost money buying a few years back.

    2005 - 2008 - Dividend was 100% of cash flow. Sustainable ratio was > 160%.

    2010 - 2013 - NG prices plunge. Write downs on property purchased.
    Unprofitable production.

    As it overshot on the upside from 2005 - 2009. It has overshot to the down side in 2013 - 2014.

    I think if we can get to what Enerplus is doing, says EV/CF of 8.8 times. Then PWE should have a mkt cap of 7.1B or $14.40 a share.
    Feb 21 08:03 PM | 4 Likes Like |Link to Comment
  • Penn West: When Will The Pain Stop? [View article]
    Just for discussion on that Cashewking,

    I work in the oil business, so I'm very close to the ground on these matters.

    Global conditions really have no impact on oil consumption. I've looked at the data from emerging economies and actually presented at 2 conferences. Around the world emerging economies are consuming oil at 3-3.5% growth while production is decreasing at 2-3%. You're surely believe me if you are in Shanghai and see the pollution and traffic. Take OGX in Brazil which turned out dry and the deep water that Petrobras has to go for.

    Even with shale, the US is still importing a lot of its oil. Bear in mind that unconventionals are more expensive on a per barrel basis.

    I've earmarked oil and gas as one of the safer industries to stay due to real fundamentals. Especially with the 10 year now yield now dropping, better hedge that inflation.
    Jan 24 10:19 AM | 4 Likes Like |Link to Comment
  • The Sell Off In Penn West Is A Buying Opportunity [View article]
    There's 1 point to add which is capital return ratios which people not in the O&G industry are not factoring in.

    Take 2011 for example.

    Cash Flow was $1,407
    Dividend $328
    CapEx $1,984m

    Naturally some people take concern about the $904 deficit.

    The question we need to ask is where that capex of $1,984 is going.
    In my previous article I already answered that question. That the company was making cap ex investments betting that NG would turn around and focusing on oil production. You're seeing this in the increased production of oil as % of production. The NG bet did not materialize.

    Where else is this capex going to? Simply evaporating? no...
    Investment in infrastructure simply does not disappear. While it may not contribute to boe in the short run, like buying title, it can be realized through divestment. Which is what PWE is doing.

    We need to dig deeper into what the cap-ex is actually being used for. Look for net 2P growth. Back to uncle Pie's example, this is like a farmer who makes a little on the farm, buys new farm land and sells some land when it has gone up in profit.

    No doubt the new CEO has also heard your concerns. That's why

    1. capex budget is now going to be $900m going forward.
    2. Dividends will only be $270m.
    3. The company will aim for 110% ratio. Meaning Cash flow from operations will have to be about $1070m.
    4. The company will only invest those $900m in project with IRR > 35%.

    They are doing EXACTLY what you're asking them for. Cut debt, spend wisely and spend within their means.
    Nov 10 10:19 AM | 4 Likes Like |Link to Comment
  • The Sell Off In Penn West Is A Buying Opportunity [View article]
    Hi everyone,
    Let's keep the discussions fruitful and avoid direct attacks on authors. We can all agree that SA authors, whether right or wrong provide an important discussion forum with their insights.

    There are buyers and sellers in the market and having different opinion makes the market.

    We'll appreciate if you have a strong short on PWE that maybe write an article called 'why PWE is a good short'. Then we can re-examin our positions using data and expert insights.

    After going through the results and the call, I do not see any significant news that would cause me to re-look my fundamental analysis.

    The asset sales are part of a portfolio re-balancing (aka, shrink to grow). Selling assets to repay debt is prudent for a new CEO, it also reduces future capital spend on those assets.

    For a company that plans to spend $900m a year for the next 5 years, $1.5B in asset sales is not very much.

    The drop in production is expect with a reduced capex and asset divestment. This again is a capital conservation strategy. I would expect higher gas plays and expensive logistic oil production to receive less capex and thereby drop in production.

    The new CEO David Roberts is a more operating style CEO, so naturally his focus will be EOR and cost control. Not so much land player or acquisition-growth.

    Expect to see a focus on netbacks and production costs. I see it's actually up QonQ.
    Nov 9 11:58 AM | 4 Likes Like |Link to Comment
  • Why Are REIT Dividends Like Everlasting Gobstoppers? [View article]
    Just a quick mention on the problem with REITs.

    1) They must pay out 90% of free cashflow. They do not account for depreciation.

    2) Management gets paid fees based on AUM. They have an incentive to buy assets at higher prices.

    3) They're greedy when other's are greedy. Fearful when other's are fearful.
    Feb 6 11:21 AM | 4 Likes Like |Link to Comment
  • Examining Argent's Urgent Changes [View article]
    I really don't know why people get so tied up about these things. There's only a small difference (tax wise) between having you're cake whole or having it into 2 slices.

    If you took the cash, all you would have to do is re-invest some of you're dividend to keep you're shareholding. If the share prices dropped further, you'll be able to buy out more of it, that's all.

    As an oil and gas consultant, the problem with Argent is not the drip or the dividend. Its the cap-ex related to dividend.

    Studying the netbacks and FD&A, its clear to me that at $19.50 CDN per boe that Argent is finding rather expensive oil and not able to replace their reserves efficiently enough to pay such a big dividend.

    In 2013, they produced about 2mm boe. Their operating cash flow was $65m. So if you replace reserves at FD&A that is 39m. That's $26m. After interest about $13m. So currently 0.24 * 61.5M shares = $14.7m which about balances out.

    I think this is a good wake up call for them. They need to slash their SG&A about 5 million and improve their FD&A to about 15/boe. I see them cutting staff and reducing C-level pay. That's a start. I'll like to see more efficient drill bit at EF and some operational expertise on it.
    Apr 15 10:15 PM | 3 Likes Like |Link to Comment
  • Penn West Continues To Execute Against Its Turnaround Plan [View article]
    Investors in Energy have to remember that its a commodity. This isn't the next Iphone or Galaxy S5. What makes a good oil and gas company is keeping drilling costs low while making good acquisitions when the time is right.

    What makes PWE so attractive is the amount of negativity around it depressing its stock price. A lot of investors have sold it down meaning its a good time to pick up some stuff. What makes it good is the turnaround story, meaning you have limited downside and a good upside potential. You also pickup a reasonable dividend and they own some choice O&G assets.
    Mar 20 10:53 PM | 3 Likes Like |Link to Comment
  • Penn West Continues To Execute Against Its Turnaround Plan [View article]
    A nice nothing happening qtr report. A bit unlucky with the wit differential, which certain shows the transport issue with a 15 difference.

    Good operating numbers especially the low finding and development cost. Recycle ratio was superb.

    I do not see production dropping much below 100k. We now need fo sew how they go about the divestment. With ng above 4 I still think they'll get some good numbers.
    Mar 8 09:51 PM | 3 Likes Like |Link to Comment
  • Penn West Continues To Execute Against Its Turnaround Plan [View article]
    Hi billyj,

    I take it that you mean Lone Pine Resources and Pinecrest Energy.

    Firstly, PWE is NOT in shale. These are conventional plays in Canada. In fact, PWE is in light crude which is different from heavy oil (Thermal), oil sands and shale.

    With regards to LP and P.crest. You can see that these two firms are exploration only firms. Their revenue is not even $100m. PWE is a completely different kettle of fish with revenues over $3B. In the last quarter, PWE had over 95% drilling success. Slave point is a known reservoir and PWE is not trying to prove the reserve but extract the oil at the lowest cost basis.

    If you're looking for success. Suncor is a great example of a company successfully extracting unconventional oil sands.

    I think you might need to flip the chart and relook at PWE since they're not missing any facts in Canadian Shale because they are not in any Canadian Shale.
    Feb 18 07:26 AM | 3 Likes Like |Link to Comment