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Richard Zeits  

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  • Halcón Resources: Bakken Wells Impress [View article]
    Dr. Z.,

    I don't. But it's a commodity.
    Mar 1, 2015. 12:41 PM | Likes Like |Link to Comment
  • EXCO Resources: Weathering The Storm [View article]
    CachoR,

    I guess it depends on how optimistic is your view on the price of natural gas (and service costs).
    Feb 28, 2015. 09:46 AM | 1 Like Like |Link to Comment
  • EXCO Resources: Weathering The Storm [View article]
    CachoR,

    How do you define "a good margin of safety?"
    Feb 27, 2015. 11:48 PM | 2 Likes Like |Link to Comment
  • Halcón Resources: Bakken Wells Impress [View article]
    Kruk,

    I thought EIA reported a huge build this week and refinery utilization was over 87%. Am I wrong?

    http://seekingalpha.co...
    Feb 27, 2015. 05:30 PM | Likes Like |Link to Comment
  • Antero Resources: Hedges Will Protect Operating Margins In 2015 [View article]
    Stag15,

    I am sure you noticed, there is a whole camp of "hold-outs," such as Cabot for example, who have been reluctant to sing up for expensive 20-year FT deals. Once takeaway gets overbuild (and it would not be surprising, given the hype and the economic incentive to build), operators who are capacity-short will enjoy much stronger economics than those operators that will have to re-sell their spare capacity for very little.
    Feb 27, 2015. 08:38 AM | Likes Like |Link to Comment
  • Antero Resources: Hedges Will Protect Operating Margins In 2015 [View article]
    Stag15,

    Great observation. Very often, spare FT can be re-sold. If not, it's a significant extra cost.
    Feb 26, 2015. 09:39 PM | Likes Like |Link to Comment
  • Crude Oil: EIA Report Sends A Bearish Signal [View article]
    M Plaut,

    It is not meant to suggest causality. Moreover, storage reflects oil that was produced and lifted weeks before.

    There is an interesting consideration, though. For every barrel purchased at a very low price (as low as $42 per barrel for the OPEC Basket back in December) there is a willing seller. Is the acceleration of supply that became visible in the storage data a component/reflection of a general "central bank" style policy by OPEC to rein in investment in order to avoid a future glut? If that is indeed the case, the de facto announcement of that policy prior to the meeting and the acceleration of supply would make sense. This is just my conjecture.
    Feb 26, 2015. 12:42 PM | 1 Like Like |Link to Comment
  • Linn Energy: In Need Of A $100 Oil And $4.50 Natural Gas [View article]
    ConArtist,

    May I refer you to this note for a response:

    http://seekingalpha.co...
    Feb 25, 2015. 11:01 PM | Likes Like |Link to Comment
  • Ultra Petroleum: The 'Back To Pinedale' Strategy Is Working Well [View article]
    DonInSanDiego,

    $3.75 per MMBtu is my approximate assessment (please note, it is an SEC-style flat price assumption). I hope to post a more detailed reconciliation in one of my next notes that may be helpful in seeing how the long term price assumption flows through to the enterprise value.
    Feb 25, 2015. 05:21 PM | 1 Like Like |Link to Comment
  • Ultra Petroleum: The 'Back To Pinedale' Strategy Is Working Well [View article]
    Milkweed,

    HHub is just a price benchmark, their specific pricing is already reflected in the differentials that they disclose.
    Feb 25, 2015. 01:43 PM | Likes Like |Link to Comment
  • Crude Oil: EIA Report Sends A Bearish Signal [View article]
    TSGR,

    The sole purpose of this note was to help to normalize and interpret the inventory numbers and submit the note within 30 minutes after the EIA data release. (I have posted quite a number of macro notes on oil recently, you may wish to have a look.)
    Feb 25, 2015. 01:28 PM | 6 Likes Like |Link to Comment
  • Linn Energy: In Need Of A $100 Oil And $4.50 Natural Gas [View article]
    Mark_A,

    I do not hide my articles and you do not do your homework. You may wish to have a look at my July 2014 article, or a dozen others, for that matter.
    Feb 24, 2015. 11:43 PM | 4 Likes Like |Link to Comment
  • Linn Energy: In Need Of A $100 Oil And $4.50 Natural Gas [View article]
    Mark_A,

    I was just trying to help, but am delighted to hear that your own method and your own conclusions work so well for you.
    Feb 24, 2015. 10:53 PM | 5 Likes Like |Link to Comment
  • Linn Energy: In Need Of A $100 Oil And $4.50 Natural Gas [View article]
    Mark_A,

    No bravado at all. Let me try to explain my point in greater detail.

    Let's say a company's production declines at 15% p.a. (base decline) and total production during Year 1 is 400 Bcfe. Base production in Year 2 would be 340 Bcfe.

    Let's assume that in order to keep production flat, the company decides to drill 40 wells in the Granite Wash play. Each well costs $15 million, yields 6 Bcfe net EUR and produces 1.5 Bcfe net in the first year (numbers are illustrative). Let's also assume, for simplicity, that all the new wells are placed on production at the end of Year 1 and in aggregate contribute 60 Bcfe net in Year 2. Production in Year 2 will be more or less flat compared to Year 1 (340 Bcfe + 60 Bcfe = 400 Bcfe).

    Cost of maintaining production flat may appear to be 40 x $15 million = $600 million.

    Cost of maintaining producing reserves would be different, however. The company produced 400 Bcfe in year 1. So to replace the produced quantity of reserves the company would need to drill 400 / 6 = 67 wells at ~$1 billion in total capital.

    Hope this makes the math more intuitive.
    Feb 24, 2015. 10:32 PM | 1 Like Like |Link to Comment
  • Linn Energy: In Need Of A $100 Oil And $4.50 Natural Gas [View article]
    rlp2451,

    Agreed (although I would add that a small portion of nat gas is effectively converted into oil via steaming in California and may not need hedging). Still, I think it's impossible to avoid taking a firm view on the longer-term oil macros: is oil going to be $70, $90, or $110+? If the view is $110, then a temporary trough should not matter. If $70, well...
    Feb 24, 2015. 10:11 PM | Likes Like |Link to Comment
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