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Richard Zeits  

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  • Sandridge Energy Preferred Convertible: A 17.2% Yield With The Potential For A 60% Capital Gain [View article]
    Tack,

    That makes sense. If it comes down to a restructuring, by that time the company may have already added some senior debt, which will make a dent in what remains available to the unsecured bonds. Plus unavoidable dissipations in a restructuring.

    There is always a possibility that restructuring will not be necessary.
    Mar 3, 2015. 11:54 AM | 1 Like Like |Link to Comment
  • Sandridge Energy Preferred Convertible: A 17.2% Yield With The Potential For A 60% Capital Gain [View article]
    Tack,

    I am not sure I understand your point: "The recovery values for bonds, for companies like these, is immaterial, i.e., likely to be minimal."

    What do you mean by "companies like this?"

    At this point, SD does not have any senior debt and is asset rich, aren't they? And they work hard to invest new money at the best possible return they can.

    Immaterial recovery?
    Mar 3, 2015. 11:17 AM | 1 Like Like |Link to Comment
  • Sandridge Energy Preferred Convertible: A 17.2% Yield With The Potential For A 60% Capital Gain [View article]
    Richard,

    I understand, thank you. I guess my point was that a more relevant comparison (or, I should say, contrast) would be in the context of the following: what should the relationship between SD bond coupon yield and SD preferred div yield be in light of the structural subordination, intrinsic value per nominal amount and the conversion feature.

    Given that all these metrics vary from issuer to issuer, comparisons to other issuers are more difficult to rationalize (and therefore are less relevant) than the comparison across the capital structure of SD.

    This is really a convertible arb valuation exercise, isn't it.
    Mar 3, 2015. 11:10 AM | 1 Like Like |Link to Comment
  • Sandridge Energy Preferred Convertible: A 17.2% Yield With The Potential For A 60% Capital Gain [View article]
    Brandon,

    Just a minor note: in the quote, "We could pick them..." should be "We could PIK them..."
    Mar 3, 2015. 10:41 AM | Likes Like |Link to Comment
  • Sandridge Energy Preferred Convertible: A 17.2% Yield With The Potential For A 60% Capital Gain [View article]
    Richard,

    You are comparing a preferred to bonds. Is it structurally correct, particularly in this specific case? Aren't bonds senior to preferred structurally? Isn't the outcome potentially vastly different for bonds and preferreds in liquidation?

    Also, why use other companies' bonds as benchmarks when SD's bonds are quite liquid?

    Also, are you aware of the PIK feature and the recent SD management's comments?

    Also, have you noticed a $500 million carve-out under the amended credit facility for a potential second lien issue that was recently announced?

    You also suggest that the conversion feature is a benefit. What is the value of that option and what does it translate into in terms of effective yield reduction? It is quantifiable.

    Finally, what is the intrinsic value that you think is available to the preferreds?

    Personally, I would find it impossible to take a view on the upside (or downside) without understanding all these elements.
    Mar 3, 2015. 09:48 AM | 3 Likes Like |Link to Comment
  • 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 | 1 Like 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
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