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Mike Maher

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  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    I don't think the New Standard holding is material to MHR. Its a small holding of stock, basically a lotto ticket. I was relieved they didn't issue the shares to buy Ambassador.
    Nov 21, 2014. 04:08 PM | 2 Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    Yea they don't look expensive, and that buys you a lot of time.
    Nov 21, 2014. 02:51 PM | Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    Depends on what natural gas prices do, since I think higher prices would increase the odds of a buyout. If I had to, I'd guess that they'd still be publicly traded in 12 months, but not in 24. I don't think management wants to sell on the cheap, or is in a rush to sell, and will continue to drill wells and prove up the acreage before they decide to flip the company. I think major buyers will want to be closer to the opening of major new pipelines and infrastructure projects in 2016-2018 to make sure they don't get snakebite by high differentials in the region.
    Nov 21, 2014. 02:30 PM | 2 Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    At the moment, the revenue does make up a decent chunk of the revenue - ~90 million for the first 9 months of this year vs $331 million for the whole company. But with the higher multiple that the MLPs are trading for, it should unlock a good amount of value and add a more clear indication of value. Also, an IPO that raises substantial funds for Eureka Hunter will allow them to put pipe in the ground faster, which could lead to an increase in the drilling pace for MHR later in 2015.

    Longer term, I think consolidation of both the midstream assets and the E&P companies needs to happen in the region. Its only a matter of time. There were rumors a year or so ago that MHR had received an offer for the pipeline system but had turned it down - I think that at some point Eureka gets taken out by a larger player, be it MarkWest, or EQM, or one of the recent MLPs in the region. Time will tell.
    Nov 21, 2014. 12:48 PM | 3 Likes Like |Link to Comment
  • American Realty Capital declares $0.08333 dividend [View news story]
    The leases they have are long term, and none of the tenants have declared bankruptcy, so there's no threat to the dividend. All the high yield stocks move ahead of the dividend dates, they are predictable, tradeable events.
    Nov 21, 2014. 09:45 AM | 4 Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    Thanks for the read. Another cold winter and MHR should be well through $6 come March, but even without a brutal winter I think the production growth will push the share prices higher. Hopefully Gary has been adding some more 2015 hedges on the natural gas side here in the last week, that should help as well. I really think this is a steal under $6, I can't believe its been in the $4's as long as it has been.

    Thanks again,
    Nov 20, 2014. 12:58 PM | 3 Likes Like |Link to Comment
  • Magnum Hunter Resources: Will It Ever Generate Positive Free Cash Flow? [View article]
    What does MHR have left to sell? The 3,000 boe/d production in the Bakken that should be closer to 4,000 boe/d by January that they are actively marketing, and have been marketing for some time. Based on what the last two chunks of land they sold netted, they should receive over $300 million for that.

    Land purchases are a one time expense, so it won't be the same going forward. If they stop adding acreage in Appalachia at such a large clip, which I think they will, those yearly costs drop drastically. That is why I suggest at least examining what a forecast without these large purchases looks like.

    They arent spinning out the pipeline, they'll retain a very large ownership % and maintain that ownership interest. Its not going to be a substantial increase in cash for MHR, but it will decrease their need to fund the system going forward. Also selling all the bakken will knock out that portion of cap ex. The company is forecasting 2015 cap ex to be $200 million give or take,

    The IRR are consistent with what other competitors (AR, GPOR, RICE) are reporting, although your right that different lease costs, takeaway contracts, etc will vary those numbers a little bit. If they have a 10% cost of capital, but a 50% IRR, how is IRR not relevant?
    Nov 18, 2014. 02:38 PM | 2 Likes Like |Link to Comment
  • Magnum Hunter Resources: Will It Ever Generate Positive Free Cash Flow? [View article]
    The business model of these companies is to acquire acreage, drill, de-risk the acreage, and sell. Profits are really a secondary concern. I'll agree that the company needs to move closer to funding its drilling (and its debt) from internally generated cash flows, but don't believe management will dilute equity here. With a 2015 cap ex budget of $200 mil, I think they can already fund that with cash on hand, the $65 million MSI will pay them in January, and internally generated funds. A sale of the remaining Bakken allows them to retire the C prefered shares and maybe a portion of the D's, and still have money left over.

    I like the graphs too. Based on the size of the numbers I'm assuming that the cap ex numbers include acreage acquisition? If you back those numbers out (which assumes that the board stops buying acreage at the clip they have been) that gap looks smaller.

    IRRs in the area are 50%+ with $4 gas, and MHR has a ton of production coming on in the next 45 days. I think if you run this analysis after the 2nd quarter earnings release the numbers will look much better to you, but its a wait and see. I look forward to seeing an update after Q2 2015!
    Nov 18, 2014. 01:44 PM | 5 Likes Like |Link to Comment
  • Halliburton-Baker Hughes hookup likely to spark more energy M&A [View news story]
    The link in the second bullet point goes to cnbc's website. SA is just highlighting silly things that CNBC contributors are saying.
    Nov 18, 2014. 10:18 AM | Likes Like |Link to Comment
  • Halliburton-Baker Hughes hookup likely to spark more energy M&A [View news story]
    KOG already agreed to be bought by WLL. And all the names CNBC listed are E&P names, not services companies like Hal or BHI. Really silly reporting by CNBC.
    Nov 17, 2014. 04:13 PM | 8 Likes Like |Link to Comment
  • 2 Of The Most Challenged Shale Players Are Also The Most Overpriced Ones [View article]
    So several points. As of November 4th, MHR had $84 million in cash on hand, and $47.7 million available on the revolver, for total $136.7 million in liquidity. They are planning on selling the remaining Bakken acreage which will likely see $300-$400 million to the company. That acreage is in a data room and there are active negotiations ongoing. MSI is buying another 6.5% stake in the pipeline in January for $65 mil in cash. And they just signed a new credit facility Oct 22 which doesnt tied to commodity prices, so thats locked in. So there is no liquidity concern.

    Second, Gary indicated on the conference call last week that the 2015 preliminary Cap Ex budget is ~$200 million, so using a trailing 12 month cap ex budget and projecting it forward makes no sense when the projected cap ex budget is 1/2 of this years budget. 2015 cap ex won't have the Bakken drilling or the pipeline construction, so its less of a reduction in Appalachian drilling than the headline numbers indicate.

    Third, production is literally going to increase 75% in the next 45 days, as all the new wells they've been drilling, and the wells that needed to be shut in in order to drill on those pads, get turned to sales. That will have big implications for internal cash flows.

    Fourth, this statement is absurd: "Within the universe of upstream shale operators, assuming fairly uniform distribution of reserves quality (which is, actually, generous to smaller players as bigger firms usually were first to the party and thus have higher-quality acreage)" Bigger first were usually first party and have higher quality acreage? Really? That explains why Shell has had such great shale success in the US, or how XOM top ticked the nat gas market when they bought XTO. Or how Chevron owns acreage just north of MHR, AR surrounds MHR, COG owns land just south, and ECA and GDP own acreage that essentially overlaps in the TMS.

    You can't invest in companies by running a screener. Second article SA has put out on MHR in a month that makes me question if the author understands the industry or even listened to a conference call.
    Nov 14, 2014. 11:46 AM | 25 Likes Like |Link to Comment
  • Rice Energy: Dry Gas Utica Success Confirmed [View article]
    Yep the comments sections are very useful for a lot of these plays, people like you add a local feel and info that would be impossible for most to get without getting on a plane. Its certainly good to take a big picture view of the Utica, I guess my point was that with the dry gas/wet gas/condensate/oil windows being sort of narrow and with the infrastructure lacking I'm taking a wait and see approach to who has the best acreage. I don't follow GST that closely, so I cant really speak to the read through from RICE, but all the productive wells, and all new infrastructure should lift all the companys in the region.
    Nov 14, 2014. 11:12 AM | 1 Like Like |Link to Comment
  • Rice Energy: Dry Gas Utica Success Confirmed [View article]
    Its a bit north for MHR, but the curve from Rice is definitely interesting. Thanks for the good work!
    Nov 13, 2014. 10:49 PM | Likes Like |Link to Comment
  • Magnum Hunter Resources EPS in-line, misses on revenue [View news story]
    Comments on the conference call
    Nov 9, 2014. 04:05 PM | Likes Like |Link to Comment
  • Frac sand firms stay optimistic despite oil price slump [View news story]
    DO any of the companies break out how much of their sales are tied to long term contracts? It'd be interesting to see what % of sales are tied to long term contracts, and when those sales might roll off - sort of like a list of lease expirations for an office building.
    Nov 7, 2014. 02:17 PM | Likes Like |Link to Comment