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Marsha Robe

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  • Marathon: Upside Potential With Down Spacing [View article]
    Currently Marathon Oil (MRO) is improving in terms of its drilling activity and production growth through down spacing as I have mentioned in the article. With its efficient drilling techniques it achieved 90,000 barrels per day in the Eagle Ford during its fourth quarter last year, which is 11% higher than the previous quarter. It expected to meet its guidance of 405,000 boepd to 430,000 boepd in 2014 through its down spacing project. Apart from that it also planned to reduce it's per well completion cost, which in turn will help to provide strong cash flow moving ahead. With these improvements, Marathon achieved higher net income of $1.75 billion for the entire 2013, compared to $1.58 billion achieved in 2012. So, I believe going long on this stock would be beneficial in longer-term.

    There is another Exploration and Production (E&P) company Murphy oil, which is integrating the down spacing techniques and expecting improved financial performance with increasing crude production going ahead. In its fourth quarter of last year the company's E&P segment reported net income of $242.5 million, higher than the $145 million during the same period in 2012. Along with the increased net income, the total production has also increased by 5% in this quarter with the significant drilling operation in its Eagle Ford shale and it is expected to increase going forward. The total net income reported by the company for the entire 2013 was $1.12 billion, which is equivalent to $5.94 per diluted share. So, you can also bet in this company along with MRO.
    Feb 19 06:28 AM | Likes Like |Link to Comment
  • Southern Copper: Minor Bump, But Long-Term Fundamentals Look Intact [View article]
    In my article, I have discussed a couple of factors that could support the copper prices, if not drive them up. The Chinese power sector accounts for more than 40% of the Chinese copper consumption which in turn is 44% of the global consumption. State Grid Corporation of China (SGCC) supplies power to 80% of China and is expected to increase its investments by 13% this year as compared to 2013. I remain optimistic about China's copper demand improving in 2014. Southern Copper generates around 14% of its revenue from the Asian market and as the company's expansion plan takes full effect, it could generate higher revenue from China. As of now, it would be difficult to comment whether the company will be able to maintain its low cost structure in the upcoming production facilities or not.
    Feb 17 04:44 AM | Likes Like |Link to Comment
  • Southern Copper: Minor Bump, But Long-Term Fundamentals Look Intact [View article]
    Yes, I agree with your point there is a mismatch between the amount of output being deferred by Freeport and output being raised by Southern Copper. However, I have interpreted the Indonesian mineral ore export tax as a potential factor that would reduce the global supply immediately and hence support copper prices in the near term. On the other hand, Southern Copper will be increasing its production output over the next three years. As discussed, China is the world's largest consumer of copper and considering the fact that Asia accounts for only 14% of Southern Copper's sales, the company could improve its position in the Chinese market with its expansion plan.
    Feb 17 04:44 AM | Likes Like |Link to Comment
  • Why Pengrowth Looks A Solid Long-Term Bet [View article]
    The Lindberg project of Pengrowth has been in the pilot phase for approximately around two years. Within this two years’ time the performance of the pilot wells has shown improving performance with estimated ultimate recovery, or EUR of around 1 million barrels of bitumen per well pair. The recovery from the Lindberg wells has been around 23% within this span of time and is expected to be around 50% within four years of operation. Though this project has similarities ( in terms of area of operation) with the Southern Pacific's SENLAC project but initial test results of Lindberg shows strong well performance. This has been possible because of Pengrowth's continuous focus on the development of its Steam Assisted Gravity Drainage, or SAGD technology to improve production from the Lindberg project.

    Pengrowth has been developing the SAGD process for its Lindberg project through the development of two pairs of pilot wells before the commercial production starts in 2015. The cumulative production from the two pair of pilot wells reached a production of around 840,000 barrels. The focus on the development of the SAGD process of Pengrowth has achieved Instantaneous Steam Oil Ratio, or ISOR of around 1.8 for the test wells with high recovery rate. The company expects a recovery of around 50% within four years of operation. A recovery rate above 50% is considered high. The steam oil ratio measures the amount of steam to produce one unit volume of oil. So the SAGD process employed in the Lindberg project is a differentiating factor with other project in the same area.

    So as the project moves into commercial stage the production from the Lindberg project is expected to increase. The increase in production is likely to generate better cash flow for the company. While I agree that the current debt levels of the company is high at around $1.45 billion (as of the third quarter of 2013) compared to an quarterly operating cash flow of $145 million. I expect that the company's technological capabilities is likely to help the production growth from Lindberg project which in turn help the growth of its operating cash flow. The increase in cash flow will help the company to also help the company to pay down its debt.
    Jan 31 06:00 AM | 1 Like Like |Link to Comment
  • Molycorp: A High Potential Rare Earth Miner [View article]
    Molycorp Magnequench provides both magnetic powder and magnets of two grades MQ1 and MQ2. MQ1 grade magnets are dysprosium free magnets which are used in applications like micro motors, and sensors, as these applications requires higher magnetic strength and smaller size. Applications which requires particularly high magnetic strength needs dysprosium, for such applications, the company has MQ2 grade, which are manufactured by using hot pressed technology , and requires 2% to 6% lesser dysprosium than normal sintered NdFeB magnets.
    Jan 31 05:59 AM | Likes Like |Link to Comment
  • Molycorp: A High Potential Rare Earth Miner [View article]
    Dysprosium is used to improve both coercivity or strength as well as corrosion resistance of NdFeB magnets to drive motors of hybrid vehicles. As you have rightly said, dysprosium being a heavy rare earth metal is scarcer than neodymium and that is why it is more expensive too. In December, price of dysprosium was about $750 per kg, while neodymium price was about $94 per kg. In addition, China is planning to restrict export of heavy rare earth metals, which may further affect supply and price of metals like dysprosium.
    Jan 31 05:58 AM | Likes Like |Link to Comment
  • How Transocean Will Benefit From Upcoming Jack-Up Replacement Cycle And West Africa [View article]
    Transocean has seven new ultra-deepwater rigs under construction. I believe that as the offshore drilling market is going through a phase of demand supply mismatch, lower number of new floater construction will help the company to ride over this phase. Bringing too many floaters into the market would further aggravate the situation and would pressure on the day rates. Further in 2014 around 14 Transocean's floaters are coming out of contract which would add pressure on the company to gain contract for these floaters. So while the floaters market adjusts to the mismatch between demand and supply, the company could generate revenue from the jackup market. As I have mentioned in my article that the jackup market is anticipated to enter into a replacement phase which would create the demand for new jackup rigs. So Transocean could have a possibility to get contracts for its fleet of jackup rigs at a better dayrate.
    Jan 28 03:42 AM | Likes Like |Link to Comment
  • How Transocean Will Benefit From Upcoming Jack-Up Replacement Cycle And West Africa [View article]
    I agree that one of the factors plaguing the ultra-deepwater rigs market in the oversupply of the number of rigs. The number of deepwater rigs coming out of contract is around 39 in 2014. The oversupply in the number of rigs could put pressure on the day rates of these rigs and is likely to create softness in the ultra-deepwater day rates. However there are regions like the Gulf of Mexico and West Africa, which could observe an upliftment in deepwater drilling during this year which could absorb this overcapacity. In 2014 around 12 floaters are expected to be contracted, with the number of floaters to reach around 60 in 2015. So while the supply-demand mismatch in the floaters market doesn't look too pessimistic.

    Further the importance of ultra-deepwater drilling is rising because of oil discoveries in water depths of more than 1,300 feet. The discoveries made until 2012 at depths beyond 1,300 feet could be around 19 billion barrel of oil equivalent. Further large reservoir discoveries in 2013 are made in the Gulf of Mexico, Cote d' Ivoire , Brazil, Newfoundland, and North Sea which is likely to add to the deepwater oil reserves of 2012. Further BP also made a Gila reservoir discovery, offshore Gulf of Mexico in December, 2013. To bring this amount of reserve into production the oil and natural gas companies require a number of floaters into operation to drill more wells. According to Transocean around 1,250 wells are required to be drilled by 2025 compared to 500 wells in 2013. So there is strong base for long term growth of deepwater floaters.
    Jan 28 03:42 AM | Likes Like |Link to Comment
  • What Will Drive Corning's Future? [View article]
    Answer 1: Yes display division forms a major part of Corning (as discussed in my article), but in the next three years, I believe that two divisions will be significant from Corning's growth perspective. First one is its telecommunication segment which manufacturers optical cables, and second one would be Specialty materials driven by Gorilla Glass of course. Telecommunication is the second biggest segment of Corning (on annual revenue basis), and has been sustaining its growth rate. While, Specialty Segment currently forms 17% of overall topline based on 2012 revenue, and has been torch bearer of Corning's revenue growth on account of robust Gorilla Glass sales.

    Answer 2: Glass manufacturing is price-sensitive, competitive, and operate in risk of commoditization in which price can come down on demand and supply dynamics. One of the important competitive advantage, which can protect Corning is its advanced manufacturing capabilities build under continuous innovation of the company. Also, the company is due to take full control of Samsung Corning Precision Materials, which is no doubt a world class facility, and can help the company in safeguarding its margins on account of price pressure.
    Jan 20 04:29 AM | 1 Like Like |Link to Comment
  • Suncor: This Oil Sands Major Looks Good For The Long-Term [View article]
    Further, WTI is expected to trade at a discount, since there is uncertainty with regards to the existing refinery infrastructure's ability to absorb increasing production of sweet crude at the current prices.
    Jan 16 12:05 PM | Likes Like |Link to Comment
  • ConocoPhillips: In Search Of More Hydrocarbons And Cash Flow [View article]
    The statistics on the Arctic has been provided to understand the importance of oil drilling in the Arctic region. Further Greenland also provides a gateway for oil and natural gas drilling in the Arctic region for ConocoPhillips. Further in my article I have provided data on oil and natural gas reserve pertaining to Greenland and the other countries located in the Arctic region.

    As I have mentioned in the article that the early entry into exploration programs could help ConocoPhillips compete in the oil and natural gas exploration in the Arctic region. Arctic region has a potential reserve of 412 billion barrel of oil equivalent, or bboe with Greenland holding around 11%. In addition the government of Greenland has been encouraging oil and gas exploration, so business environment could be conducive to oil and natural gas exploration.

    Statoil has been involved in the Arctic exploration for quite some time. It has operations in the ice free region of the Arctic circle for around 20 years. So its gives advantage to ConocoPhillips through the partnership as mentioned in my article. However very large scale exploration and drilling could be uneconomical because of bad weather and high drilling costs. The company has mentioned that some wells reached a drilling cost of around $500 million.
    Jan 16 12:03 PM | Likes Like |Link to Comment
  • Suncor: This Oil Sands Major Looks Good For The Long-Term [View article]
    "The info regarding Brent vs WTI has been sourced from EIA's forecast for WTI prices published this month. The information is available in this link here:"
    Jan 16 11:56 AM | Likes Like |Link to Comment
  • What Will Be Driving Nokia In 2014? [View article]
    NSN has itself declared in its press release that it has "won the largest non-Chinese vendor share in the recent massive TD-LTE tender." Both NSN and Alcatel-Lucent had won 11% share in deployment of their TD-LTE network, while Alcatel-Lucent is the major supplier of EPC for 4G LTE with a share of 24%.

    I have highlighted the Mercedes deal in support with Honda (which happened last month) just to highlight strategic value HERE holds for Nokia.

    As for MSFT/NOK deal, it has been cleared by European Union and U.S. Department of Justice, but it faces hurdle in China. Chinese regulators are making sure that post acquisition, Microsoft doesn't raise patent licensing fees as both Huawei and ZTE have raised concern about the same. Nokia will continue to trade and is expected to rise above $8 mark due to strong tailwinds from NSN segment and Patent portfolio. There is still confusion over fair valuation of its patents which includes 30,000 patents and 10,000 innovations. It will take time to fully realize value of its patents and to be incorporated in its stock price.
    Jan 15 09:55 AM | 2 Likes Like |Link to Comment
  • Nvidia: Will 2014 Be An Inflection Point? [View article]
    @bhttsl: you are welcome
    Jan 14 04:05 AM | Likes Like |Link to Comment
  • Phillips 66: Investment That Will Pay Off [View article]
    I agree with you that the Marathon Petroleum is an attractive buy than Phillips 66 with same degree of leverage employed. However when we look at return on equity, return an assets and net margin, we can say that it is not far behind Marathon. And as discussed in my article that Phillips 66 is strengthening its midstream operations with additional export terminal in the U.S. Gulf Coast, this will provide upside to the company’s stock.
    Parameters Phillips 66 (PSX)
    Marathon Petroleum (MPC)

    Return on Equity % (TTM) 17.13 20.08
    Return on Assets % (TTM) 6.99 8.06
    Net Margin % (TTM) 2.05 2.33
    Jan 8 12:58 PM | Likes Like |Link to Comment