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Richard Zeits

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  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Hendershott,

    With regard to the Shale rally over the last several days, I am looking in the direction of Europe as the primary and very potent catalyst.
    Apr 17 05:15 PM | Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    Pablomike,

    I agree, it's not a huge step-out. But it is a very strong and "smooth" result. It also should address the concern that the sweet spot is limited to the western portion of the play.
    Apr 16 07:16 PM | Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    Agreed, it is a small club at this point. GDP, obviously, have the greatest leverage to the play "per share." HK comes next. Then ECA, CRK and SN.
    Apr 15 06:53 PM | Likes Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Schcas,

    Thank you for your observations. Valid. There is no question, valuation will look more compelling if you elect to use higher commodity price assumptions. By the same token, one can think of lower commodity price outcomes as well. There is really no way of taking a view on the stock without taking a view on the macros.

    As I commented above, cost savings are not the primary driver of value in this case. It is all about the 5-year EUR.

    I think of my downspacing assumption as fairly aggressive. Personally, I do not think of the illustrative scenario that I used as overly conservative.
    Apr 15 06:51 PM | 1 Like Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    M.O.S.,

    In the NPV-10% calculations I rely on the company's estimates (the second slide in the article). I use the $95/bbl WTI case. I interpolate for those sensitivity points that are not on the company's slide.

    KOG's slide does not provide the differential, but I believe they are using WTI less $10.

    I cannot tell what NRIs are for each specific area (they have some low-NRI non-op acreage, for example). What is more relevant though is the royalty burden: ~18% on the FBIR acreage and ~20% elsewhere.
    Apr 15 06:45 PM | Likes Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Okoil,

    No. Just to be clear, I am fully relying on the NPV-10% estimates provided by the company and interpolate them. The "economic threshold" EUR of ~400 Mboe that I used for illustration is a gross EUR number.

    I have my own well economics models but I do not want to introduce a whole new element of complexity into the discussion at this point.
    Apr 15 06:40 PM | Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    Colizacr,

    The break-even depends strongly on operating assumptions. IMO, the play does not work below 500 MBoe per well. Also it really depends on how you model the EUR.

    However, ff all wells performed like the Crosby, this would be a stellar play.
    Apr 15 01:49 PM | Likes Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Goldenretiree,

    Thank you for reading. I just want to clarify - I don't think there is a production decline. Production is growing in fact at an impressive rate.
    Apr 15 12:58 PM | Likes Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    BaysideDave,

    Thank you for terrific thoughts. In fact I very much agree with many things you said.

    I hope if I am a bit too aggressive on the downspacing assumption, it would be offset to some degree by the company's ability to add to the inventory - one way or another - with time. I totally agree that there is essentially no free acreage left in better parts of the play. However, one can get bits and pieces on occasion for a price. Returns would not be as good as on the early entry acreage, but, as you said, a strong operator has some leverage to make money over time.

    I am also a bit concerned with some wells flattening quicker than one would have hoped (and not just downspaced locations). Hence the "haircuts."

    I will try to provide some analyses on well performance in follow up notes (similar to what I have done for HK, SD, Shell, SN and few others). I will be interesting.
    Apr 15 12:51 PM | Likes Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    BakkenPro,

    I am only counting those locations that I assume will clear the economic hurdle. This is just a scenario. If you like my framework, you can fairly easily run your own assumptions through a similar calculation.

    I do not see a big conflict between my calculation and what the company is projecting - in fact I am heavily relying on the company's work (I believe I spelled out those areas where I applied haircuts). I also need to refer you to the last section in my note for some additional detail.
    Apr 15 11:21 AM | 1 Like Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Brooks1988,

    As I wrote, there are always future business opportunities. With good management, they should have some value today. It would be somewhat speculative, however, to include those in the framework of an NAV analysis - the E&P business is highly competitive, and KOG will have to compete against its peers for opportunities (as a result, returns may be competed away to some degree).
    Apr 15 09:05 AM | 1 Like Like |Link to Comment
  • Kodiak Oil & Gas: A New Paradigm - A Moderate-Risk Development 'Story' [View article]
    Hotpbwiki,

    This is actually an interesting question. Let's do the math together: 650 future wells at $0.5 million saving per well; $325 million should be discounted back to today. I get $230 million or 6.5% of current stock price. Let's also take into consideration that some operating efficiency gains are expected.

    This example actually is very helpful in demonstrating that while cost are important, well productivity is by far the most important factor from valuation perspective.
    Apr 15 07:59 AM | 3 Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    Aeroguy48,

    I would not go that far yet. This is still an emerging play with less than 40 new generation wells drilled (total gross production is less than 10 MBoe/d).

    But the dynamic is positive and this may become a meaningful play. Is it a Bakken? No. Is it conceivable that the TMS will produce 200,000 Bo/d within three-four years? Certainly.
    Apr 15 05:33 AM | Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    1kirby,

    You are exactly right. Both figures, 236k net acres in the east and 307k net acres total, already reflect outside interests. It is fairly common in the industry to have partial working interest. Nothing wrong with it. It allows to delineate the play with less capital. Generally, there is a lot of cross-ownership in the play (HK may be participating in CRK's wells and vice versa).
    Apr 15 03:04 AM | Likes Like |Link to Comment
  • Halcon Resources: Strong Read-Across From Goodrich's TMS Result [View article]
    DrillBit Research,

    Thank you for reading. This is indeed an exciting play. There aren't that many new oil plays that are close to commerciality.
    Apr 15 01:08 AM | Likes Like |Link to Comment
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