Warren Resources; A Rare Deep Value E&P Opportunity [View article]
whoa, easy there, I didnt mention anything about size or credit rating, the comparison was purely street sentiment (especially around growth, catalysts, asset mix) and valuation (p/cf, ev/ebitda, ev/pv-10)...
Warren Resources; A Rare Deep Value E&P Opportunity [View article]
Appreciate the positive feedback, glad you guys enjoyed the article. We'll see over time if WRES rises to reflect its underlying asset value.
As per catalysts (besides oil); buybacks, a buyout, an MLP spin, or continued execution and a warmer reception by analysts to WRES's value and other attributes. Another company in a similar position (not growing fast, no catalysts or sexy asset to highlight, penalty box for small mistakes in past) was Apache Corp. They were trading at their proved value and mgmt is buying back shares. WRES is trading at half of that.
Scorpion, you're skepticism (cynicism?) and the street's complacency is why there is an incredible value opportunity. There haven't been many missteps in years (that i could find) and new managment is making all the right moves operationally and with capital. Not to mention making smart new hires to fully exploit the value of their low-risk high-return asset base.
As per your comment about dead money (and permanent discount), 1) WRES is trading at trough multiples despite its continued execution and 2) cash is cash, and they make a lot. The discount will dissappear if managment uses its cash wisely beyond the drillbit.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
oh geez, i thought you were implying you had a technical background via working at netherland sewell. no offense, but i think you are way off in interpreting the upside potential with ECT's proved reserves. i've talked with a couple of netherland sewell employees in the past, and they'd agree. like i said, not all marcellus wells are similar, even if they are in the same area. please read mike904's comments on my previous article (he's a petroleum engineer)
as for production, from the Q's and K's. Production in 3Q12, 4Q12, and 1Q13.... 2993, 2583, and 2174. so production declined 16% in 1Q13, which is even faster than the 14% decline in 4Q13. Some raymond james commentary from last 2 quarters...
Production for 4Q12 of 28 MMcfe/d was down 14% sequentially, and 16% below our forecast of 33.2 MMcfe/d.
Although production for 3Q12 of 32.5 MMcfe/d was up 10.5% sequentially and 15% above the original targeted production rate, this quarter’s rate was below our estimate of 34.2 MMcfe/d by 5%.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
that's awesome, thanks for the discussion. you still work there? who do you think is being too aggressive with their reserve accounting? any E&P push the limits of your comfort level?
even with your technical knowledge of other people's wells, marcelus acreage, and how to further analyze p90 reports, that still doesn't give me comfort that you know a lot more about ECT's wells (unless you know that Ryder was being materially more conservative than other engineers/operators and ECT's wells were completed in the same way as higher EUR wells).
as for the underperformance vs analyst expectations, it hasn't been prices. prices are known, volumes are not. volumes have disappointed, i can point you to sell-side notes if you're still skeptical...
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
yes, you're right, it was ryder scott that did their reserves, my bad. the current idea i'm working on uses netherland sewell so i got mixed up. that doesn't change anything really.
i get that their are uncertainties, you think they are to the upside. i'm not willing to bet on that. others, like art berman, would say there is a huge risk to the downside and your P90 is more like P50 or lower.
NGT unitholders are not experienced investors and likely did very little work, believing that the market was efficient and the price was fair. 90% of the ppl that hold this have never read a 10-Q.
what are your technical reasons that these are above average wells when they keep underperforming expectations?!? either you know something we don't, which if so is an awesome advantage, or if not you're not being impartial.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
whoa, again, it sounds to me like you are assuming all marcellus wells are equal. and that most definitely is not the case.
1) how do you know ECT's p50 number is 4.25? The log-normal distribution is different for every well. 2) it doesn't take years of data to revise type curve assumptions and adjust EURs, it takes months, and that's why reserve engineers give every well a fresh look once a year, to see how P90 has changed. 3) Marcellus wells produce ~30% of their EUR's in the first 3 years. Looking beyond 10 years out adds little economic value. So we can argue about the size and length of the tail and ultimate EURs all we want but that doesn't change the near term profile or the current value discounted back (because the production units you are arguing for have little current economic value). 4) Moreover, these wells are apparently falling well short of analysts decline assumptions based on all of the distribution and production misses, so not sure what give you any comfort that ECT's wells will materially outperform expectations when they've been underperforming.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
appreciate the further explanation. no doubt reserves reports are meant to err on the side of conservatism but 1) all reserves are judged in the same manor (and on a relative basis ECT is grossly overvalued to its peers and any other upstream M&A comp when judged in a similar manor), and 2) if the decline curves had changed (or the boy had aged per your analogy) then the reserves would have been written higher, no?
i get your point that there could ultimately be upside to reserves, those are likely in later years (and have little current value discounted back) and that thesis alone (i.e. reserves *could* be higher than reported) doesn't pass my investment criteria as a value investor. especially when there are so many cheaper choices.
i hope you read my next article, i look forward to getting your feedback.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
You are looking at leading edge assumptions for public companies that have an incentive to highlight their best wells. I understand the disconnect. ECT's wells were completed 1-3 years ago, as improvements were happening.
I'm looking at Netherland Sewell data. They are the top reserve engineering firm in the world. They looked at all the wells individually and came up with those numbers, not me, all i did was adjust the price.
So unless you think you know more than the top-tier reserve engineers who have all the data, I wouldn't be buying based on what Range Resources or Cabot oil says about their new wells.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
hi 829251, my position hasn't changed, so no worries on that front. also, while the stock is going down, it would go down eventually regardless. You can't squeeze $13 of value from something that will only pay $7. The math doesn't work. The trust distributes all of its cash on its way to ZERO. I'm helping holders who due their proper due diligence avoid large inevitable losses.
Are ECA Marcellus Trust Holders About To Get WHXed? [View article]
Wow. I was pretty darn close.
$0.443 = a 14% sequential drop in net income and a 35% sequential drop in distribution.
This was well short of expectations and numbers likely come down. It usually takes days/weeks for this to fully hit units though (at least looking at how it has happened in the past).
Are ECA Marcellus Trust Holders About To Get WHXed? [View article]
ha, you have a great writing style augustus. hope that short position works out for you/us. i'm thinking the distribution comes in sub 45c (anyone who tells me prices were higher in 1Q than 4Q doesn't understand how gas futures/bid week works), which could result in a roundtrip back to $10 or possibly lower. $10 seems to be the level where the sell-side has put their new NAV valuations, but it is based on numbers that 1Q results might show to be too high. keep an eye out for my next write up in a week or two, i think you might like it..
Warren Resources; A Rare Deep Value E&P Opportunity [View article]
Warren Resources; A Rare Deep Value E&P Opportunity [View article]
As per catalysts (besides oil); buybacks, a buyout, an MLP spin, or continued execution and a warmer reception by analysts to WRES's value and other attributes. Another company in a similar position (not growing fast, no catalysts or sexy asset to highlight, penalty box for small mistakes in past) was Apache Corp. They were trading at their proved value and mgmt is buying back shares. WRES is trading at half of that.
Scorpion, you're skepticism (cynicism?) and the street's complacency is why there is an incredible value opportunity. There haven't been many missteps in years (that i could find) and new managment is making all the right moves operationally and with capital. Not to mention making smart new hires to fully exploit the value of their low-risk high-return asset base.
As per your comment about dead money (and permanent discount), 1) WRES is trading at trough multiples despite its continued execution and 2) cash is cash, and they make a lot. The discount will dissappear if managment uses its cash wisely beyond the drillbit.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
p50 = probable (2p)
p10 = possible (3p)
every company is different so i've seen the whole spectrum. some have all 3p and no 1p. some have all 1p and no 2p or 3p.
ECT has no 2p or 3p reserves. NONE. it only has 1p reserves. which are recalibrated each year. now i see where you where confused...
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
as for production, from the Q's and K's. Production in 3Q12, 4Q12, and 1Q13.... 2993, 2583, and 2174. so production declined 16% in 1Q13, which is even faster than the 14% decline in 4Q13. Some raymond james commentary from last 2 quarters...
Production for 4Q12 of 28 MMcfe/d was down 14% sequentially, and 16% below our forecast of 33.2 MMcfe/d.
Although production for 3Q12 of 32.5 MMcfe/d was up 10.5% sequentially and 15% above the original targeted production rate, this quarter’s rate was below our estimate of 34.2 MMcfe/d by 5%.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
even with your technical knowledge of other people's wells, marcelus acreage, and how to further analyze p90 reports, that still doesn't give me comfort that you know a lot more about ECT's wells (unless you know that Ryder was being materially more conservative than other engineers/operators and ECT's wells were completed in the same way as higher EUR wells).
as for the underperformance vs analyst expectations, it hasn't been prices. prices are known, volumes are not. volumes have disappointed, i can point you to sell-side notes if you're still skeptical...
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
i get that their are uncertainties, you think they are to the upside. i'm not willing to bet on that. others, like art berman, would say there is a huge risk to the downside and your P90 is more like P50 or lower.
NGT unitholders are not experienced investors and likely did very little work, believing that the market was efficient and the price was fair. 90% of the ppl that hold this have never read a 10-Q.
what are your technical reasons that these are above average wells when they keep underperforming expectations?!? either you know something we don't, which if so is an awesome advantage, or if not you're not being impartial.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
1) how do you know ECT's p50 number is 4.25? The log-normal distribution is different for every well.
2) it doesn't take years of data to revise type curve assumptions and adjust EURs, it takes months, and that's why reserve engineers give every well a fresh look once a year, to see how P90 has changed.
3) Marcellus wells produce ~30% of their EUR's in the first 3 years. Looking beyond 10 years out adds little economic value. So we can argue about the size and length of the tail and ultimate EURs all we want but that doesn't change the near term profile or the current value discounted back (because the production units you are arguing for have little current economic value).
4) Moreover, these wells are apparently falling well short of analysts decline assumptions based on all of the distribution and production misses, so not sure what give you any comfort that ECT's wells will materially outperform expectations when they've been underperforming.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
i get your point that there could ultimately be upside to reserves, those are likely in later years (and have little current value discounted back) and that thesis alone (i.e. reserves *could* be higher than reported) doesn't pass my investment criteria as a value investor. especially when there are so many cheaper choices.
i hope you read my next article, i look forward to getting your feedback.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
like i said, i'm taking the reserves for what the reserve engineers say they are. no more, no less. i'm just changing the price. it's pretty simple.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
I'm looking at Netherland Sewell data. They are the top reserve engineering firm in the world. They looked at all the wells individually and came up with those numbers, not me, all i did was adjust the price.
So unless you think you know more than the top-tier reserve engineers who have all the data, I wouldn't be buying based on what Range Resources or Cabot oil says about their new wells.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
Are ECA Marcellus Trust Holders About To Get WHXed? [View article]
$0.443 = a 14% sequential drop in net income and a 35% sequential drop in distribution.
This was well short of expectations and numbers likely come down. It usually takes days/weeks for this to fully hit units though (at least looking at how it has happened in the past).
Are ECA Marcellus Trust Holders About To Get WHXed? [View article]