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Michael Fitzsimmons

 
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  • Callon Petroleum's Q1: Excellent Drilling Results In The Permian Rocket Stock Higher
    Tue, May. 13 CPE 23 Comments

    Summary

    • Callon Petroleum's Q1 earnings report was strong across the board with Permian production up 46% sequentially.
    • Permian Basin drilling results beat expectations as a result of optimized completions with longer laterals.
    • As a result, the company raised EUR estimates in the Permian and increased its full-year production guidance.
    • Despite the stock's recent run-up, there appears to be potential for an additional 25% left in the stock by year-end.
  • Vermillion Energy: Relentless Focus On Capital Efficiency Will Drive Stock To $85 By Next Summer
       • Tue, May. 13 VET 18 Comments

    Summary

    • Vermilion Energy has a remarkable 20-year record of delivering total returns at a 36.6% compound annual growth rate.
    • The company has achieved this long-term record by a relentless focus on capital efficiency.
    • VET is not resting on its laurels. Growth in production is set to accelerate; funds flow per share will continue growing ~20%.
    • The Corrib project comes online in mid-2015, adding an estimated 9,700 boe/day (net) for Vermilion. That's 24% of total 2013 average production.
    • As a result of the growth in production and funds flow, VET should top $85 by next summer.
  • ConocoPhillips Continues To Outperform Exxon And Chevron
    Mon, May. 12 CVX, PSX, XOM 65 Comments

    Summary

    • ConocoPhillips delivered excellent Q1 earnings.
    • Strength came from stronger NA natural gas prices, higher bitumen prices, and across COP's globally diversified portfolio.
    • The company is on track to achieve management's goal of 3-5% growth in production and margins.
    • COP trades at a discount to both Exxon and Chevron in terms of both P/E and dividend yield.
    • Shares should be accumulated.
  • PetroQuest: Initial Woodford West Relay Wells Greatly Exceed Expectations, And The Stock Will Too
       • Thu, May. 8 NEE, PQ 18 Comments

    Summary

    • PetroQuest's strategic plan is to funnel free cash flow from its Gulf Coast assets to develop its Woodford acreage.
    • 50% of total 2014 cap-ex is allocated to the liquids-rich Woodford play.
    • It was a wise decision: production data on the company's first 6 well completions exceeded expectations by ~50%.
    • Today's Q1 EPS report was bullish: oil production increased 93%; net income of $0.15/share was up 275% and higher than full-year 2013.
    • As a result of the Woodford catalyst, and today's Q1 EPS report, I am raising my previous 12-month price target to $13 - more than double the current stock price.
  • Natural Gas Is Pushing Energy Stocks Higher
    Editors' Pick • Wed, May. 7 COP, ERF, PEYUF 63 Comments

    Summary

    • After years of abnormally low natural gas prices, producers are finally reaping the rewards of firmer natural gas prices.
    • Domestic natural gas storage levels are still near decade-lows for this time of year.
    • As a result, the energy sector is starting to outperform the broader market.
    • Two companies yet to report Q1 earnings and nicely leveraged to NA natural gas prices are Enerplus and Peyto Exploration.
  • Enerplus: What Statoil's Q1 Results Infer For Enerplus's Q1
       • Thu, May. 1 COP, STO, XOM 20 Comments

    Summary

    • Statoil's recent Q1 earnings release reported a YOY doubling of US natural gas prices.
    • Like Statoil, Enerplus has significant natural gas production from the Marcellus shale.
    • As a result, Enerplus will see a big jump in its Q1 earnings - due out on May 9th.
    • I am raising my 12-month price target on ERF from $22 (already hit) to $25.
  • Statoil: Excellent Q1 Trounces Estimates; Here Come The Dividends
    Tue, Apr. 29 STO 35 Comments

    Summary

    • First quarter earnings blowout due in part to a doubling in US gas prices this winter.
    • 2013 annual dividend coming; quarterly dividends begin.
    • Raising my 12-month price target (again) to $33.
  • Star Gas Partners: MLP Yields 5.2% And Has 20% Upside Potential
       • Sat, Apr. 26 SGU 36 Comments

    Summary

    • Star Gas Partners is the nation's largest retail distributor of home heating oil.
    • The MLP operates in 14 Northeast and Mid-Atlantic states, and has close to a half million customers.
    • The recent Griffith Energy Services acquisition is estimated to add $13-14 million in EBITDA.
    • 20% capital appreciation potential + 5.2% dividend yield = total annual return of 25%.
  • Is The Pendulum Swinging From Oil Back To Natural Gas? - Part 2
    Mon, Apr. 21 PEYUF 20 Comments

    Summary

    • Natural gas storage inventory levels are near an 11-year low and exactly half of the level of one year ago.
    • Meantime, Gulf Coast oil inventories are at record highs.
    • It would appear that for the first time in years, the outlook for the price of domestic natural gas is more bullish than that of domestic oil.
    • Canadian gas producer Peyto Exploration looks poised to benefit from the trend in North American natural gas prices. Stock could.
  • Highpower Technology's Bearish (Then Bullish) Two-Day Seesaw
    Tue, Apr. 15 SNE, HPJ 42 Comments

    Summary

    • Highpower Technology announces 1 million share private placement on Monday. Stock drops 27%.
    • On Tuesday, HPJ announces it is a supplier to SONY Corporation. Stock reverses course and spikes higher.
    • Despite these short-term developments and stock gyrations, Highpower's long-term fundamentals are solidly bullish.
    • Raising my 2014 price target from $6.40 to $8.40, double Monday's closing price.
  • ConocoPhillips Blows Me Away With Eagle Ford Production And Resource Upgrades
    Mon, Apr. 14 COP 52 Comments

    Summary

    • COP Chairman & CEO says the company is adding 700 million boe of resource in its Eagle Ford acreage alone.
    • COP increased its 2017 Eagle Ford production guidance to 250,000 boe/d. That's up 100,000 boe/d just over last year's guidance of 150,000 boe/d.
    • Matt Fox, EVP of E&P, says COP has booked only 20% of the unconventional reserves it ultimately expects to recover from its Eagle Ford and Bakken acreage.
    • With a P/E=9.6, COP is at least 20% undervalued. It is arguably the best-positioned independent E&P energy company on the planet.
  • Phillips 66's Big Deal To Sell LPG To Sinopec
    Thu, Apr. 10 SHI, PSX 17 Comments

    Summary

    • Last month Sinopec signed a long-term contract to purchase LPG from Phillips 66.
    • While Washington restricts crude exports, there are no limits on LPG sales.
    • Recent estimates have the contract at 34,000 bpd. At current LPG prices that equates to ~$850 million in annual revenue for PSX.
    • Just one more reason why Phillips 66 could well be the best single investment on "Shale USA".
  • Peyto Exploration: A Winning Stock For Growing Oil Sands Diluent Demand
    Tue, Apr. 8 CVX, IPPLF, PSX 12 Comments

    Summary

    • Oil sand bitumen production requires diluent blend in order to meet pipeline flow specifications.
    • Growing oil sands production is expected to increase diluent demand by ~50% to 600,000 bpd over the next 4 years.
    • Canada imported 150,000 b/d of diluent from the US in 2013.
    • Peyto Exploration is excellently positioned as the low cost gas producer in Alberta's Deep Basin to supply growing (and very profitable) diluent demand.
    • Peyto's total 12-month return should approach 40%.
  • Newfield Exploration: Expect A 25% Return On Sale Of China Assets And SCOOP Drilling
       • Tue, Apr. 8 NFX 10 Comments

    Summary

    • Newfield Exploration has successfully transitioned its overly diverse portfolio into one focused on 4 core area.
    • The company is now focused on the liquids-rich Williston, Uinta, and Anadarko Basins, along with the Eagle Ford shale. The company's SCOOP acreage is its crown jewel.
    • Domestic pre-tax PV-10 grew 44% in 2013, driven primarily by a 26% increase in liquids reserves.
    • The company has turned the corner: 2013 full-year net income was $0.94/share after a huge loss in 2012.
    • Stock could gain 25% this year on expected production growth of ~15%; a doubling of earnings YOY; China asset sale could fetch $500-600 million.
  • Warren Resources: Hidden Value Of Coal-Bed Methane Assets Will Cause Shares To Double By 2015
       • Fri, Apr. 4 APC, ETE, WRES 30 Comments

    Summary

    • Warren Resources has considerable reserves upside in its Wyoming coal-bed methane asset base.
    • The company drilled 27 CBM wells in 2013; production will ramp up on these wells through 2015.
    • The company acquired midstream assets from Anadarko in 2013 that will lower LOE by ~$0.70 per Mcf.
    • Increases in production, reserves, and earnings will push stock price up 50% in 2014 and another 50% in 2015 (2015 PT= $10.50/share).
  • Is The Pendulum Swinging From Oil Back To Natural Gas?
    Editors' Pick • Thu, Apr. 3 COP, ERF, PEYUF 93 Comments

    Summary

    • In the eight weeks since January 24, 2014, crude oil stocks in the Gulf Coast region grew to record levels.
    • Meanwhile, domestic natural gas storage levels are 992 Bcf below the five-year average of 1,814 Bcf.
    • Energy investors should consider the potential impact of potentially lower oil prices and higher natural gas prices.
  • Kodiak Oil & Gas: Polar Project A Grand Success - Stock Has 40% Upside In 2014
       • Tue, Apr. 1 KOG 26 Comments

    Summary

    • Kodiak Oil & Gas' Polar Project showed an entrepreneurial spirit by sacrificing short-term production gains by longer term value creation.
    • The 6-month production results from Polar's downspacing tests are excellent.
    • As a result, KOG will approach a watershed inflection point in 2014: cash flow breakeven.
    • In 2014, KOG appears to be on track to grow NPV by a similar amount as in 2013 (81%).
    • Bottom line: the stock could hit $17/share in 2014 - up 40% from yesterday's close.
  • ConocoPhillips: Cash Margin Expansion Will Lead To Substantial Dividend Growth
    Fri, Mar. 28 CVX, PSX, XOM 54 Comments

    Summary

    • ConocoPhillips' plan to increase cash margins/boe by 3-5% through 2017 looks achievable.
    • As a result, increased incremental cash flow of $6 billion could lead to an additional $0.50/share in dividends.
    • COP should achieve a total return of 20% in 2014.
  • Inter Pipeline: Big Volume Spike And Shareholder Rights Plan Not Indicative Of An Imminent Takeover Bid
    Thu, Mar. 27 IPPLF 7 Comments

    Summary

    • Inter Pipeline shipped ~30% of Canadian crude oil supply and ~40% of total oil sands volumes in 2012.
    • Inter Pipeline transports ~1 million b/d of petroleum products and processes 40% of natural gas exported from Alberta.
    • On February 28th, the company experienced a huge increase in daily trading volume (57x average).
    • That was followed up by the adoption of a shareholder's rights plan. Is the company in play?
  • HighPower Technology: Easy 30% Upside As Lithium-Ion Battery Demand Set To Go Parabolic
    Editors' Pick • Tue, Mar. 25 LEXG, TSLA, HPJ 52 Comments

    Summary

    • HighPower's new state-of-the art automated battery manufacturing facility has come online just as lithium-ion battery demand is expected to explode.
    • HPJ's small size means it is highly leveraged to rechargeable lithium-ion battery growth.
    • A new battery recycling facility starts up in Q2 - a new catalyst; should lead to additional customers and revenue.
    • Q4 earnings were outstanding; earnings set to grow by 300% in 2014.
    • After rising ~100% over the last 6 months, the stock easily has another 30% to go in 2014.
  • Vermilion Energy Enters Williston Basin By Buying Reserves On The Cheap
    Sun, Mar. 23 VET 11 Comments

    Summary

    • Latest acquisition continues the company's history of value-oriented and accretive deals; cash flow of new assets will self-fund future growth.
    • Based on current netbacks, VET paid ~50% below the cash flow value of proved reserves; potential upside for another doubling of the assets' reserves due to unbooked drilling locations.
    • Bargain deal buys reserves on the cheap and opens up a new core area for the company in the Williston Basin.
    • For $400 million (~5.5% of EV), VET grew proved reserves by 8%. Conservative upside is another 4% growth in proved reserves.
  • Peyto Exploration: Set To Soar On Higher Production, Gas Prices, And Profit Margin Expansion
       • Tue, Mar. 18 PEYUF 26 Comments

    Summary

    • Peyto is the lowest cost gas producer in Alberta's Deep Basin.
    • Operating margins were 76% in 2013; profit margins were ~25%.
    • Production expected to grow ~30% in 2014 while the AECO gas price is up 30% YOY: profit margin/Mcfe could double in 2014.
    • As a result, total distributions will grow to an estimated ~$1.36/share in 2014; stock could appreciate 40% over the next twelve months.
  • Gold: U.S. Income Inequality Is A Powerful Long-Term Bullish Catalyst
    Fri, Mar. 14 GDXJ, JNUG, GLD 64 Comments

    Summary

    • Income inequality in the US is far worse than most people realize.
    • As a result, the government will be the backstop for more poor people and will, in effect, subsidize private corporations. That means more debt.
    • As a result, ever more US debt will drive gold prices substantially higher.
  • Oryx Petroleum Strikes Another Gusher In Kurdistan - Stock Has Significant Upside Potential
       • Thu, Mar. 13 ORXPF 16 Comments

    Summary

    • Oryx announces its 4th consecutive discovery in Kurdistan: well flowed at 5,500 bbl/day of light sweet crude oil.
    • Production expected to go from zero to 16,250 bbl/day (net) by 2014 year end.
    • Oryx's cut of 2P reserves in Hawler license have an estimated value of 2-3x current market cap with huge upside potential.
  • Phillips 66: Significant Insider Buying A Very Bullish Indicator
    Wed, Mar. 12 PSXP, PSX 20 Comments

    Summary

    • Several executives increased their share holdings in January and February.
    • Many large transaction were direct buys in the low $70s.
    • Insider buys and a relative lack of insider selling are a bullish indicator moving forward, as is the potential for weakening WTI and mid-con crude prices.
  • PetroQuest Energy: A Strategy For Success
       • Tue, Mar. 11 PQ Comment!

    Summary

    • After a big loss in 2012, the company posted net income of $0.14/share in 2013.
    • Reserves replacement was 295% in 2013; PV-10 grew by 99%.
    • The company has positive momentum and an excellent strategy to create shareholder value; share price could double over the next 12 months ($11).
  • Resolute Energy: Excellent Q4 Operational Performance Bodes Well For 2014
    Mon, Mar. 10 REN 29 Comments

    Summary

    • Despite a $188 million impairment charge, underlying operations and production is very strong.
    • Today's sell off in response to the earnings report is irrational and present a great entry point for investors.
    • Stock is undervalued; reiterate expectations for 6-month return of 25%.
  • Exxon Mobil Needs A Big Dividend Hike This Year
    Fri, Mar. 7 XOM 143 Comments

    Summary

    • Exxon Mobil pays the lowest dividend yield in its peer group.
    • At the same time, the stock has also been a laggard in terms of capital appreciation.
    • At a minimum, shareholders expect a dividend yield competitive with Exxon's peers.
  • Vermilion Energy: A Compelling Combination Of Capital Appreciation And Yield
       • Fri, Mar. 7 STO, VET 32 Comments

    Summary

    • This lightly followed Canadian energy company has a 15-year total return CAGR of 25%.
    • Bullish catalysts include the outlook for strong European natural gas prices for years to come and the Corrib natural gas project in Ireland.
    • Long-term success is due to a very selective acquisition strategy combined with focused high-return capital investments.
    • The current yield is 4.1%.
  • Whiting's Niobrara Reserves And Top Shale Oil Producers' 2013 Reserve Replacement Ratios
    Mon, Mar. 3 COP, CLR, EOG 30 Comments
  • Dril-Quip Reports Powerful Q4 EPS And Very Strong Backlog
       • Sat, Mar. 1 DRQ 18 Comments
  • Resolute Energy's Big Q4 Earnings Surprise: Stock Should Be Propelled 25% Higher Within 6 Months
       • Sat, Mar. 1 REN 7 Comments