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Mike Walker  

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  • 2 Reasons To Short Baker Hughes [View article]
    Lousy. But no one is valuing these companies based on the current trough earnings. Not in the OFS space and not in the E&P space.

    I will give you another (soft) reason for the merger to go through. Ego. This is Lesar's last major decision before he retires. He can either be known as the Halliburton CEO that pulled off the largest OFS acquisition ever, or he can be known as the CEO that pissed away $4BB for cancellation fees and acquisition activities. Which is more likely ?
    Aug 25, 2015. 02:21 PM | Likes Like |Link to Comment
  • 2 Reasons To Short Baker Hughes [View article]
    I wasn't aware Halliburton's Sperry Sun (Mwd/Lwd) and Security DBS (Bits) were 'problems'. In fact they both have a decent reputation in the global market place.
    Aug 25, 2015. 10:26 AM | Likes Like |Link to Comment
  • Chevron's Dividend Is At Serious Risk [View article]
    FCF will improve in a hurry as soon as investment in the the mega LNG projects (Gorgon and Wheatstone) completes. The dividend is not in any risk and Cheveron will simply borrow to cover negative FCF in the interim.

    Good time to add shares.
    Aug 16, 2015. 07:51 AM | 23 Likes Like |Link to Comment
  • Diamondback Energy: Lower Spraberry Continues To Impress [View article]
    And what about LPI ? They have an extensive lease position in Reagan county that is smack dab in the middle of the primary Spraberry trend. Funny, but they never talk much about Spraberry potential in their conference calls or investor presentations.
    Aug 15, 2015. 03:47 PM | Likes Like |Link to Comment
  • The 165 Million Barrel Crude Oil Revision [View article]
    Except for a few countries in the Gulf and Russia - I expect a significant production drop as drilling activity has been curtailed 50% or more. A few mega projects will reach the finish line as they are too far along to stop now. But everything else has been delayed or cancelled. This does not bode well for 2017 as international programs have longer cycle times.
    Aug 15, 2015. 06:27 AM | 3 Likes Like |Link to Comment
  • Diamondback Energy: Lower Spraberry Continues To Impress [View article]
    Another informative article.

    I had one question. During the Q&A of the PXD Q2 call, the analysts singled out Spraberry development and apparently PXD had concerns that at least their Spraberry acreage had undergone extensive vertical well development and further horizontal wells would need to be planned taking into account that there was at least some reservoir depletion from the vertical programs.

    in your opinion, is this a serious issue when trying to calculate potential Spraberry locations and reserves ? Or is the recovery of the vertical wells just too small to have an impact on a horizontal program ?
    Aug 15, 2015. 03:13 AM | 1 Like Like |Link to Comment
  • Halliburton - Short Selling Up Significantly Since November 2014 [View article]
    Yes, this all the long BHI/short HAL hedge trade.

    The other way to play HAL long at a discount would be buy BHI
    Jul 16, 2015. 04:25 PM | 2 Likes Like |Link to Comment
  • Goldman picks seven U.S. shale oil buyout targets [View news story]
    Deepwater has an equivalent to higher cost/barrel compared to the best shale plays.

    Technical risk for deepwater is higher (think BP's Macondo). Political risk is high as many deepwater provinces are in areas where it is difficult to do business (West Africa / Brazil). Time to development for deepwater five to ten years versus less than a year for the shale plays. This gives a big advantage to the shale plays on a NPV basis.
    Jul 16, 2015. 04:04 PM | 11 Likes Like |Link to Comment
  • Goldman picks seven U.S. shale oil buyout targets [View news story]
    Actually this makes a lot of sense. The majors are winding down their major developments and will soon be wildly cash positive, even at these low prices. They can either buy back shares, sit on the cash, or go into very risky areas like the arctic - where costs will certainly be much higher than US Shale.

    There are estimates that by 2020 the Permian will out produce both the Bakken and Eagle Ford so I would high grade the seven names to those with exposure to the Permian - PXD, APC and EOG.
    Jul 16, 2015. 03:58 PM | 6 Likes Like |Link to Comment
  • Will Shale Oil Follow In The Footsteps Of Shale Gas? [View article]
    So what is shale oil's equivalent to the "three-shale" sequence of Barnett-Haynesville-Ma... in natural gas?

    In shale oil that appears to be Bakken-Eagle Ford-Permian.

    I would argue that, of the three, the Permian is prime due to its vast vertical and areal extent and true multi-decade inventory. Bakken and Eagle Ford are good of course - but with more limited scope and running room.
    Jul 14, 2015. 12:15 PM | 3 Likes Like |Link to Comment
  • Will Oil Jitters Stymie Halliburton's Asset Sales? [View article]
    For sake of clarity, the breakup fee is $3.5BB, payable by HAL to BHI in the case that the merger fails, not $2.3BB.

    Disclosure - long BHI, short HAL taking the trade that the merger will happen at the terms the deal was originally struck, i.e. share swap at a ratio of 1.12 HAL to 1 share BHI plus cash of $19 each BHI share.
    Jul 10, 2015. 11:09 AM | Likes Like |Link to Comment
  • Oil Services Pair Trade: Long Baker Hughes, Short Halliburton [View article]
    Thanks for the write up. I have the long BHI / short HAL arbitrage trade in my portfolio and expect the deal to close in H2 as per the original deal.
    Jun 23, 2015. 03:43 PM | 1 Like Like |Link to Comment
  • Anadarko Petroleum - A Rebound With No Foul [View article]
    Wasn't aware that Anadarko had any exposure to the Bakken ?

    Niobara (sic) ?

    Jun 17, 2015. 04:33 AM | Likes Like |Link to Comment
  • Is Schlumberger's 'Sweetheart Eurasia Deal' Foreboding For Halliburton Asset Sales? [View article]
    Ok so you are on the other side of the spread trade, long HAL and short BHI. That's what makes a market.
    Jun 8, 2015. 06:25 AM | Likes Like |Link to Comment
  • Is Schlumberger's 'Sweetheart Eurasia Deal' Foreboding For Halliburton Asset Sales? [View article]
    IMO, there are three scenarios that HAL could 'walk'

    1. The barriers at the DOJ become too difficult to overcome
    2. BHI will have given various warranties and conditions precedent as part of the sales agreement. If these have been breached to the extent that HAL believed they could 'walk' without paying the $3.5BB - then there may be a valid Board discussion on re-evaluating the merits of a deal.
    3. The general equity or crude market totally collapses so that HAL's financing covenants are voided.

    Evaluating the consideration based on trough earnings is not very useful as no company will sell itself based on trough earnings unless it is distressed, and BHI is not a distressed target.

    Again Eurasia and BHI as target companies are not comparable -- Eurasia a commodity drilling contractor, BHI with embedded proprietary technology and genuine strategic synergies.
    Jun 8, 2015. 04:18 AM | Likes Like |Link to Comment
COMMENTS STATS
370 Comments
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