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Mike Maher  

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  • Deep Value Play Of The Year: Helmerich & Payne [View article]
    A lot of companies are hedged for most of 2015, but that doesnt translate into oilfield services as directly. E&Ps are looking for 30-40% decreases in prices from oilfield service companies. The back half of 2015 is going to see revenues at these companies fall off a cliff. I think there's still a lot of time to short these names.
    Jan 29, 2015. 08:30 PM | Likes Like |Link to Comment
  • EIA Natural Gas Inventory [View news story]
    Trading natural gas futures is called the widow makers trade - UGAZ and DGAZ arent really investments, they're trading vehicles, and not the best ones at that. I'd avoid them unless you are a professional.
    Jan 29, 2015. 01:58 PM | 2 Likes Like |Link to Comment
  • I'm Looking For A 170% Profit On These Magnum Hunter Preferreds [View article]
    They reworked the debt in Oct or Nov, so that Sept PR is not up to date. MHR isnt going bankrupt, but I'd rather be (and am) in the common, not the preferred. But that was great timing if you got in on the D's Thursday or early Friday
    Jan 24, 2015. 04:07 PM | Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    So a couple of thoughts, with the caveat that I listened to the call in the car today, so I've got to go through it again.

    Firsttracks is right about the time frames with this company - don't believe them, they're almost always late, sometimes by a month, sometimes by 6 or more. Gary basically said on the call that if they had more production on earlier in the year, they would have hedged more. Its a bit of Monday morning quarterback to say that if the wells came on in Nov when gas was above $4 we could have hedged and that woulda helped alot, but its the truth. So I completely agree with taking the dollar value of the JV, and the time frame on the JV, with a grain of salt.

    Now to contradict myself, grain of salt aside, I think they could flip the pipeline pretty quickly and realize a ton of cash. There were rumors previously that EQT offered $1 billion for it and they decided not to sell it. I think any of the recent IPOs for midstream in this region would attempt to bid, as well as EQM, MWE at least.

    The $0 cap ex meant that he was going to cut spending on new projects for at least a couple months - I agree that he was a bit contradictory, but he'll spend money later in the year for sure. The acreage buy was pre-planed, but Im happy they have a very very small acreage budget. Again, that being said, if Gary sees a deal he likes, Im not sure he'll say no.

    We need a quarter at current production levels to get a real feel for how much cash is coming in from the current ~32,500 production. The fact they "couldnt" talk about production or cash levels was sort of strange - but I agree he sounded like he missed production. Didnt get any clarity on realized prices, but Columbia TCO is at $2.80, and Tetco M2 is at $2.08, so the interconnects are very important, as is their ability to move gas.

    Biggest news was the JV, but without any concrete details, I cant judge it. We'll see what it is whenever it gets signed.
    Jan 23, 2015. 05:56 PM | 1 Like Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    He's likely blocked from buying since they're so close to the earnings release. And he was buying at $5 or $6 last year I think.
    Jan 23, 2015. 05:06 PM | Likes Like |Link to Comment
  • Why Magnum Hunter's Eureka Hunter Pipeline Is No Better Than The Company Itself [View article]
    If there were concerns on the viability of the pipeline or a threat to the IPO I'm not sure an investment bank would have bought half the equity 30 days ago for ~$500 million. I also don't think you'd be saying you may initiate a long position in 72 hours.

    The truth is that the pads companies are putting on in Appalachia are so prolific that one or two 6-10 well pads per year should be enough to continue at least 20% growth in volumes for Eureka. The region is years behind in building pipeline capacity, and Eureka is in a sweet spot.
    Jan 22, 2015. 07:51 AM | 5 Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    I would be sleeping easier if so many members of the management team were not getting margin calls. I'm surprised so many people inside the company have had it happen.

    So i guess the real point of difference for us is the break even cost of production. I'm going under the assumption that at these oil prices the Bakken is not making money. I'd guess Bakken oil prices are around $29, and I dont have a solid number on their actual lifting costs for that unit vs the rest of the company, but either way to be conservative I'll say its break even.

    The Marcellus and Utica are a bit of a grey area. The dry gas shouldnt need to be processed, and it should be going straight to sales - I'm guessing production costs are between $.50 and $1, so even with local prices around $2 they should be generating income on the producing wells. On the wet gas, NGL prices track oil, so the NGLs will contribute less, but again I'm not sure on the exact costs here. The processed gas will add some uplift, but with the new Utica wells I'm expecting dry gas to make up a larger % of sales, so that will be less of a driver. They'll spend some $ drilling the pads they've already started work on, and maybe making sure all the land is held by production, but they can shift that towards later in the year if they want. Antero just said they are delaying completion work until October when new pipelines open, so that may slow supply growth in the region for the next 9 months.

    Cash generated from the operations of Eureka system will be minimal if estimates are for ~$50 mil EBITDA, so that wont be a source of cash til the IPO. I can't imagine Morgan Stanley would have bought into the system if they didnt think the IPO was a slam dunk, and with MSI carrying the capital contribution of MHR they save money there.

    Long term, yes they need natural gas prices to rebound. But I think they're already set to make it through the year, and natural gas exports start around Q4, so that should soak up some of the excess supply. Its about survival now for higher prices later. Gary has great acreage, a banking background, and some interesting levers he can pull. Now its time to see if he's flown too close to the sun or not.
    Jan 21, 2015. 09:56 AM | Likes Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    Dom S is a little more than a $1 below HH, Tetco M2 is about -$0.70, and Col Gas TCO is -$0.05. None are great prices, but if MHR is moving more gas to hubs other than Dom South and Tetco, they'll be realizing better prices. They've been adding interconnects, so we'll find out more when they report their quarter, or give a production update, which looks like it could come tomorrow. Getting any gas out to TCO basically at HH would be a huge accomplishment.

    I think you're wrong on the bankruptcy, and I'll work through the math why - at Nov 7th earnings report they had $89 million in cash and $47.7 mil on the Senior Revolving Credit Facility. December 22 they received $55 million from MSI. Based on the previous 3 quarterly earnings calls they've spent $381.5 million on E&P and Midstream this year, and the new presentation says 2014 cap ex was ~$450 mil, so figure Q4 cap ex was $70 - $80 million. Interest and Dividends are running, what ~$10 mil a month? So say another $20 mil in expenses from interest and dividends, and say (incorrectly) that all $80 million of Q4 cap ex was spent after the Nov 7th presentation. $89 mil + $55 mil (both cash) + $47.7 mil (on the revolver) is $191.7 million in liquidity today, subtract $100 mil ($80 in cap ex and $20 in interest) gives you $91.7 mil in liquidity right now. And this is assuming none of the production added to any liquidity. The new production likely wont add much since it all just came online.

    Cap ex is going to come in around $100 mil in 2015, imo, because a) they dont have the cash to drill a ton of wells, and b) they dont have economic incentive to drill a ton of wells. I agree equity raises are out, and I don't see the borrowing base increasing either. The Kentucky properties are on the block for ~ $50 mil ( I've said for a while i think EQT buys that acreage) and even if they only bring in $50 mil in the Midstream IPO thats another $100 mil combined, which just about covers the interest and dividends. I also think that they'll start selling some of the acreage in counties where they dont hold large positions, so northern Noble county, and some other scattered tracts along the fringe, so that may bring in more cash, depending on how many acres they sell.

    We'll know hopefully a lot more tomorrow when they file the PR about the reserves. I'm expecting to hear about the Stalder pad as well, and an exit rate #. Also wouldnt be surprised to get comments about liquidity, realized prices, and some talk of the new interconnects and being able to move gas to higher priced hubs.

    Still long (and wrong for about 6 months) MHR.
    Jan 20, 2015. 08:20 PM | 1 Like Like |Link to Comment
  • Markets Missing The Facts On Magnum Hunter Resources [View article]
    There isnt a doubt in my mind that MHR will survive. They can cut cap ex to the bone if needed- it will probably come in between $100 and $150 million. The remaining Bakken assets won't be sold will oil down here - so that influx of cash is out, but they still should realize strong demand for their Eureka Hunter IPO, which will probably happen sometime over the summer.

    I dont see any reason to suspend the preferred dividends, since they should, based on my estimates, have the cash flow to make those payments and the debt payments, even with prices down here for natural gas.

    Further up this comment thread there's a discussion about if the preferreds make sense vs buying the debt, since the interest rates are similar and the debt is higher up on the capital structure, so thats something to consider. I'm in the common, some calls here and there, but not the preferreds or the debt.
    Jan 19, 2015. 02:29 PM | Likes Like |Link to Comment
  • North Dakota oil production hits record but fewer wells drilled [View news story]
    Gotcha - sorry for misreading that.
    Jan 15, 2015. 12:03 PM | Likes Like |Link to Comment
  • North Dakota oil production hits record but fewer wells drilled [View news story]
    You're thinking rents drop because lower gasoline encourages more people to live outside the city? Seems like a bit of a stretch, given that tolls and train fares won't come down. The rapid buildout of apartments in north jersey looks long in the tooth there tho. As an example Harrison is adding thousands of new apartments for a town that has thousands of residents...a new path station and a soccer stadium won't necessarily fill all those units.
    Jan 15, 2015. 10:52 AM | Likes Like |Link to Comment
  • Magnum Hunter guides 2014 revenues well below consensus [View news story]
    Theres an update new Jan presentation that corrects slides 4 & 7. Looks like Revenue for the year 2014 of $400 mil, and production is close to 40,000 boe/d
    Jan 13, 2015. 11:55 PM | 2 Likes Like |Link to Comment
  • Magnum Hunter guides 2014 revenues well below consensus [View news story]
    Ha just came on here to make the same comment, according to Q3 earnings TOTAL revenue for the 9 months ending 9/30/14 was $331.6 mil. Either its a typo, or that $325 has something stripped out of it, maybe the pipeline rev? Maybe the're backing out revenue that was generated by assets that were sold already? Idk, something doesnt make sense. And a ton of Feb call buying right before the close, so someone with money thinks they're going to come out and address this
    Jan 13, 2015. 04:21 PM | Likes Like |Link to Comment
  • Magnum Hunter guides 2014 revenues well below consensus [View news story]
    They've hinted at 2015 cap-ex in the $150 mil to $200 mil range
    Jan 13, 2015. 03:10 PM | 1 Like Like |Link to Comment
  • Why Valero Energy Is The Long-Term Buy That Nobody Is Talking About [View article]
    You completely lost me about talking about metals and Space X. Why do metals prices affect VLO?

    If the author thought VLO was a buy they'd have a position in the name. Long VLO for the FCF, but don't expect it to outperform if the energy sector keeps getting hit.
    Jan 12, 2015. 12:48 AM | 2 Likes Like |Link to Comment
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