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Michael Fitzsimmons

 
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  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Thanks hoyt. So you think the best way to BXE is using $55/bbl - is that just for the short-term, or do you expect WTI to stay around that level for the long-term? At the end of the day, I don't want to get into the oil price prediction game. What I can do is value the company along the lines of normal accounting procedures, and that is what I did. If WTI stays at $55 or so for a few years, then your opinion will have been proven to be absolutely correct. My gut tells me the truth is somewhere in between, perhaps $75-80/bbl.
    Dec 20, 2014. 03:43 PM | Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Disaster? The stock has dropped from $10 to $3, has bounced quite strongly off that bottom. At this point, "disaster" implies bankruptcy or something along those lines, and I simply don't see that happening. Meantime, the stock is up 6% since the article was written. Not bad for a day's work imho.
    Dec 20, 2014. 03:19 PM | 1 Like Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Hi index60/40 - well, that is an interesting thought. While I obviously agree the shares are a good investment at these levels, I wonder how the market would respond to that use of cash when, in general, the market is concerned about the liquidity of many unconventional energy companies. While it is spilled milk now, my tongue and cheek reply that it would have been better to have never issued more shares to begin with. That said, they obviously fetched more for those shares than what the market is trading them at now!
    Dec 20, 2014. 12:51 PM | 2 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    River18 - that's a great question and if you are a follower of mine you know that I have in the past questioned Canada's "strategy" on several occasions. With such a wealth of oil and gas reserves as well as several well-funded and very large pipeline companies, why Canada has betting put most of its transport hopes on Keystone-XL all these years is beyond me. While there has been some discussion and progress on other pipelines to the West coast, it seems to me this should have begun years ago and been a much higher priority. Certainly Canada holds a geographic advantage as compared to the US Gulf Coast in terms of transport coasts to Asia. That said, building LNG plants on the West Coast of Canada will cost more due to labor and lack of infrastructure as compared to US GC. That said, if it's a long-term strategic goal - why cannot Canadian policymakers figure out a way to make it happen?

    2) Marcellus is such a monster that it has already, and will continue to, impact natural gas prices in North America as a whole. That said, there is still room for low-cost Canadian gas producers to make a decent living, especially once US LNG exports and chemicals demand ramp up in earnest in late 2015 and to a greater extent in 2016. Transport costs from PA to western Canada will do some to level the playing field - especially for say the big nat gas demand from oil sands producers. And of course Canadian exports have been falling to the US for years now, and production has been falling or flat yoy for some time:

    http://bit.ly/13Nx0Ce

    Also, many overseas businesses that are heavy gas users (steel for instance) are relocating to the US to take advantage of the low price.

    All that said, it is a concern and as can be seen this year, a mild winter is all that is needed for AECO prices to fall in spite of Canadian storage levels significantly below normal. So, nat gas demand is still very much dependent on weather.

    Also, had the EPA in the US done its job this week and declared coal fly-ash a hazardous material (if mercury, lead, arsenic - basically a heavy metal cocktail is not a hazardous material, what is?), you would have seen a further shift away from coal to nat gas for power generation. As it is, the EPA blew it and left it up to the individual states for which we already know the politicians are bought & paid for by the coal and utility industries. The US citizen loses again.
    Dec 20, 2014. 12:48 PM | 2 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Hi hoyt - well, I've said all I care to on this issue other than a) as it's not too difficult to revalue the reserves based on the current price of oil if that is what you are after and b) current production growth has much to do with year-end reserves values as it is this year's drilling program (plus the acquisition) which in large part will determine yearly proved reserves additions.

    So let's just wait for the 2014 year-end reserves report comes out, see how far off I was (or how close), and then we can discuss it further at that time.
    Dec 20, 2014. 12:31 PM | 2 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Good question Gtoz. Considering the loss Orange has taken on its investment so far, I would imagine part of the discussion might revolve around how to monetize some of the acreage Bellatrix holds as well as executive compensation and stock options.
    Dec 20, 2014. 12:28 PM | 3 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Thanks NBNC and have a great weekend!
    Dec 20, 2014. 10:00 AM | 2 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Thanks Gregg - and yeah, anyone who can look past current commodity price weakness should find value in BXE. A mild winter, low gas prices, and a general sell-off in the Canadian energy sector really took a toll on this stock. Of course, management did do shareholders any favors with the (botched) secondary that diluted value. I think Orange Capital will make sure stuff like that doesn't happen again going forward. Let's hope for a decent Q4 and perhaps more importantly the year-end reserves report. Meantime, the stock is showing good strength after the low it put in. All we need now is a few polar vortex's ;)
    Dec 20, 2014. 09:28 AM | 3 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    You bet. I see the stock was up 6.6% yesterday on the rally in crude and the energy sector in general. While I would have liked to see a bit more volume, it was nice to see a the stock up 4 days in a row after the low put in on Monday.
    Dec 20, 2014. 09:10 AM | 2 Likes Like |Link to Comment
  • Vermilion Energy: The 5.6% Dividend Is Secure [View article]
    Hi raycol42 - Thanks for the catch - I was taking the info from slide 15 of the December presentation and screwed it up. I'll edit that now. I appreciate you!
    Dec 19, 2014. 01:27 PM | Likes Like |Link to Comment
  • Vermilion Energy: The 5.6% Dividend Is Secure [View article]
    Hello SFTLR - I don't know if the if there were concerns of a dividend cut or not by market. Speaking for myself only, I can say that after the big drop in the stock price, I started wondering if that was the case. Obviously from the title, after researching this article I now feel like a dividend cut is highly unlikely.
    Dec 19, 2014. 01:23 PM | Likes Like |Link to Comment
  • Vermilion Energy: The 5.6% Dividend Is Secure [View article]
    Thanks - I didn't come close to catching the bottom myself as I must admit the severe drop in the stock price caught me by surprise. Once VET on the NYSE went under $40, I thought wow, maybe I am missing something and that was the motivation to write this article. Taking another look at the company made me feel more confident in holding the shares. It's nice to see a strong bounce off of $40. Meantime, some nice cold winter weather would certainly help the gas price in both Canada in Europe.
    Dec 19, 2014. 09:39 AM | 2 Likes Like |Link to Comment
  • Bellatrix - Orange Capital's 14.3% Stake A Positive Catalyst [View article]
    Hi Jeff - I gave the valuation method I used quite a bit of thought, and here's why I think there is some validity to my method for BXE:

    1) the 2014 year-end reserves report will be valued on historical 2014 pricing, that's just the way it's done in the industry.
    2) the majority of BXE production is gas, which has not seen near the slide the oil has.
    3) the big hit in the estimated NPV10 will be in the 2015 year-end report (not the 2014 year-end rpt) when the SEC average monthly average price will likely be much more representative of the current (low) prices
    4) however, BXE's 2015 production will likely keep growing at a ~30%+ rate and in effect just about cancel out the lower oil price
    5) lastly, note i discounted the total NPV10 estimate by 10% even though the SEC oil price used will be down only 6% and the majority of BXE production is gas. That is why I said the estimate was conservative.

    Also, I should point out that being a Canadian company, BXE's consultants won't use the SEC formula for pricing. I simply used it as a measuring stick. So, it will be very interesting to compare my estimate with the actual, which came out in March last time. Likely the biggest delta in my estimate and reality might come due to my overall reserves growth estimate as opposed to the pricing used.

    I agree with your last statement about the upside. Pricing is transitory, land is not. As I said in the summary portion of the article:

    "At the end of the day, the investment thesis in Bellatrix remains what it has always been: ~400,000 prime acres in Western Canada's Sedimentary Basin, 20 consecutive quarters of a 100% drilling success rate (i.e. a reproducible drilling program), excellent production growth, and growing FFO and profits."
    Dec 19, 2014. 09:31 AM | 5 Likes Like |Link to Comment
  • Vermilion Energy: The 5.6% Dividend Is Secure [View article]
    Hi Randy - well, don't feel bad. I made a very amateurish mistake with VET and averaged down, so my cost basis went from a nice gain to the mid 50's, so I am underwater now. I am more optimistic then you on the world economy, mostly because history shows us that big drops in the price of oil really goose economies - not just the US, but also big importers like Japan, China, India, and South Korea. So, I am hanging onto my VET and collecting the 5% dividend while I wait for Corrib to kick in. Can't wait to see the free-cash flow VET throws by the end of next year.
    Dec 18, 2014. 08:03 PM | 1 Like Like |Link to Comment
  • Vermilion Energy: The 5.6% Dividend Is Secure [View article]
    Thanks for the info Uncle Pie.
    Dec 18, 2014. 08:00 PM | 1 Like Like |Link to Comment
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