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Mike Walker  

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  • Anadarko withdraws merger proposal after Apache rejected deal inquiry [View news story]
    Let the games begin !

    Actually APA would not be a bad fit for APC. Retain the Permian acreage, the Eagle Ford acreage, Alaska and possibly the Canadian assets. Egypt could be divested post deal as well as North Sea. Major opportunities for cost reduction.

    Look for APA to remain in play, if not by APC then by others as shareholders become increasingly disgruntled.
    Nov 11, 2015. 08:52 AM | 1 Like Like |Link to Comment
  • Pioneer Natural Resources - Don't Be Shortsighted [View article]
    Obviously you are not a reservoir engineer, neither have you closely examined the breadth and scope of PXD's acreage position in the Permian.

    PXD estimates that they have 50 YEARS of drilling locations, and that the 50 YEARS is based on no uplift from closer spacing, alternative producing horizons or new technology.

    So a statement that the company's reserves will be in ruins by the end of the year is a joke.

    Disclosure - long PXD, short OTM PXD puts
    Nov 4, 2015. 12:46 PM | 4 Likes Like |Link to Comment
  • Chevron beats by $0.33, beats on revenue [View news story]
    Just put this one away in your sock drawer, relax while you collect your 5% divi and open the sock drawer when it hits 120.
    Oct 30, 2015. 09:06 AM | 12 Likes Like |Link to Comment
  • Halliburton-Baker Hughes Merger Faces Regulatory Hurdle In Australia [View article]

    Long BHI / Short HAL is a popular arbitrage play based on the terms of the deal. You buy 1000 shares of BHI and short 1120 shares of HAL. The current spread as of yesterday was about $10500 based on 1000 shares.

    When / if the deal closes HAL will issue 1120 shares of HAL for the 1000 shares of BHI plus $19 each BHI share. So all your BHI shares will be exchanged for HAL. You are short 1120 shares of HAL so those exchange shares cancel each other out. What's left is the $19 per share or $19000 for your long position that you paid $10500 for when you initiated the trade. Profit is the $8500 difference.

    I dont need to worry about closing the position in the event of a successful merger, it will be done automatically.

    If the merger fails (Shock's trade) then BHI will shed value, HAL will likely fall as well due to the $3.5BB cancellation payment and I will be scrambling to rescue a losing trade.

    That is what makes a market.
    Oct 25, 2015. 01:44 PM | Likes Like |Link to Comment
  • Halliburton-Baker Hughes Merger Faces Regulatory Hurdle In Australia [View article]

    Your article was about Australia so I commented. If you write an article about the EU / HAL / BHI I will do my DD accordingly.
    Oct 25, 2015. 01:32 PM | 1 Like Like |Link to Comment
  • Halliburton-Baker Hughes Merger Faces Regulatory Hurdle In Australia [View article]
    The Australia Competition and Consumer Commission cannot by itself derail the merger because it has no jurisdiction outside of Australia. It can reject or impose conditions on the merger of only the local entities in Australia (Halliburton Australia / Baker Australia). In my opinion, this would have little consequence on the overall merger:

    Australia is a tough market for Oilfield Service due to tough competitive environment, discounting and high regulation including draconian labor laws. Neither Halliburton or Baker is pulling a significant amount of profit out Australia. The tail is not wagging the dog.

    If the merger in Australia was blocked, then Baker / Halliburton would likely decide to ringfence Baker Australia, exclude it from the merger and let the management of the of the ringfenced entity harvest it for cash at little overall financial loss since its current contribution is minuscule anyway.

    It is telling that the ACCC has delayed its opinion until after the point in time where the DOJ will make their ruling. At that point the ACCC has little choice but to go along as the alternative will be the ringfence strategy outlined above, which would be a worse outcome to Australia then agreeing to the merger / DOJ conditions.

    Disclosure - Long BHI/Short HAL and added to my position on the news Friday.
    Oct 25, 2015. 01:53 AM | 2 Likes Like |Link to Comment
  • Baker Hughes - A Few Key Thoughts [View article]
    Despite the tone of the article that BHI should be evaluated independently, my take is that there are only three possible investment themes - all merger related.

    A. You are long BHI because you are actually bullish on Halliburton post merger and want to pick up HAL with a discount.
    B. You are in on the long BHI / short HAL arbitrage trade with the hope to pick up a nice % gain upon deal close late 2015 / early 2016.
    C. You are predicting that the deal falls through and you are short BHI as BHI will fall in the event of a failed deal.

    Of course BHI management must proceed as if they remain independent, but from an investment perspective - it's all about the merger.
    Oct 22, 2015. 09:55 AM | 3 Likes Like |Link to Comment
  • Stick with quality energy stocks amid the carnage, analyst says [View news story]
    The longer this goes on, the tighter the spring is wound, the more violent the correction. When even Iraq says they can't take it any longer - that really says it all.
    Sep 28, 2015. 11:13 PM | 4 Likes Like |Link to Comment
  • 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