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Richard Zeits

 
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  • Halcón Resources: Eagle Ford Update And Latest TMS Data Points [View article]
    Pablomike,

    I do not know what stands behind the timing of well completions but tend to think that this lumpiness is benign as long as new wells are of high productive quality.
    Aug 14 09:01 AM | 3 Likes Like |Link to Comment
  • Halcón Resources: Eagle Ford Update And Latest TMS Data Points [View article]
    61rookie,

    Thank you for taking the time to read. I have not posted on ECA for awhile, clearly overdue. Hopefully soon.
    Aug 14 08:49 AM | Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    Bankstocks,

    I was actually going to post a note specifically on GDP and some potential strategic scenarios. The discussion of the "ask" price on the CC is quite interesting per se. I agree with you that the company's overtones were very confident. I will try to summarize some of my thoughts in the next note, would be interested to hear your thoughts.
    Aug 13 10:11 PM | Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    Californiansurfer,

    I have looked at the Mississippian Lime play in some detail and find the issues very different from the TMS. I was hoping that in the above article I would be able to bring across observations regarding the matrix productivity in the TMS. Still very early in the game, but the two plays appear to be quite different in this critical respect.
    Aug 13 01:12 PM | 4 Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    Californiasurfer,

    Thank you for your comment. While I do not share some of your conclusions and interpretations, I think it is beneficial to hear a different point of view.

    I should also add that there is one area where I would totally agree with you - exploration in a new, technically complex play is risky and not inexpensive. The TMS is still in the second inning and is yet to be proven commercial, in my opinion. I would also add, there was a time when the Bakken was not a commercial play and typical EUR per well in the Marcellus was one-third of what it is currently.
    Aug 13 12:42 PM | 6 Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    JHP,
    Congratulations on your TMS ownership, it is a great new play.

    You make very valid points. I would just add that the play's economic boundaries may expand with time, as costs go down and confidence in execution success goes up.
    Aug 13 11:19 AM | 2 Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    Fracker,

    I would just note that DVN is no longer participating in the TMS effort.
    Aug 13 10:13 AM | Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    JHP,

    I agree it is important to monitor actual production volumes, particularly in the long run for cumulative production.

    However, I am not surprised by the discrepancy between the reported metric and state data. Companies typically normalize production data. Differences can be particularly significant for early-time data when testing and production equipment is typically installed.

    Also importantly, wells in the TMS typically take some time to ramp up their oil volumes, so the first ten days are unlikely to be the peak production period.
    Aug 13 10:12 AM | 3 Likes Like |Link to Comment
  • Tuscaloosa Marine Shale - It Works! [View article]
    Ziggyzig,

    It depends on the point of reference - let's not forget that the stock was at $12-$13 per share less than nine months ago.

    I will try to cover some factors that may impact the stock's price in my next note. I will try at some scenarios one year forward and then correlate the outcomes to the current stock price.
    Aug 13 09:44 AM | 1 Like Like |Link to Comment
  • Kinder Morgan: Mega Merger Enhances Dividend Growth Story [View article]
    Jordan,

    Thank you for your thoughtful research report.

    There is one thesis in the article that I am not sure I understand:

    "Kinder Morgan, Inc. (NYSE:KMI) announced a blockbuster deal that has the potential to significantly alter the landscape of the US energy industry..."

    If this is just a re-structuring of MLP ownerships, how is it landscape-altering? For the entire US energy industry?

    And what makes this deal "blockbuster"?
    Aug 11 10:57 AM | 2 Likes Like |Link to Comment
  • SandRidge Energy: Is 30% Correction Enough Of A Penalty For The Weak Quarter? [View article]
    SocraticMunger,

    I was expecting that the trajectory of production growth was in fact above the 26% guidance, driven by strong wells in March-May. It seems I was wrong.

    Without going into full granularity of my 62 Mboe/d Q2 estimate, the idea essentially was that 71 wells in Q1 resulted in production declining by ~2% q-on-q. As I estimated that many more - and much stronger - wells would contribute to the Q2 volumes, the estimate came out at 20%-26% q-on-q growth in Q2. Oil IPs appeared to be exceptionally strong in Q2, so I was hoping that oil would in fact be a positive surprise.

    The 8% actual sequential growth in oil now requires that I revisit my decline rate assumptions. Also, I no longer can dismiss SDT's oil decline trajectory as an irrelevant outlier (I think I have a link to the SDT article in the note above).

    On declines, I don't think that portfolio base decline in the next few years can be so dramatically different from were it is now as you suggest - many new wells are coming online. Again, I cannot help thinking of SDT's oil production trajectory.

    130%+ IRRs sounds terrific, but... what is the company's organic growth rate?

    I would also avoid using per-flowing-boe metrics - can be very misleading.
    Aug 8 10:53 PM | 4 Likes Like |Link to Comment
  • SandRidge Energy: Is 30% Correction Enough Of A Penalty For The Weak Quarter? [View article]
    SocraticMunger,

    I am not sure what you mean by the 5.6x multiple. I see 6.7x, and that is after the stock's correction. Are you calculating the Firm Value correctly?

    It would be great if EBITDA grew at 30%. Organically. Unfortunately, it took massive outspending (which equals to debt growth) and much higher gas prices to post a 30% increase in the past year. Let's not forget, this is a PRO FORMA increase. Based on the new production guidance, I have no confidence that EBITDA will show 30% growth in the next 12 months. However, as I explained in the note above, outspending will remain very, very high.

    Is 6.7x a good deal? Well, what is the natural decline rate on this kind of EBITDA? You tell me, and then we can debate what is a good deal and what is not.

    The economic benefit of the water disposal system is already captured in the $840 million EBITDA. I am afraid in your argument you are essentially counting its value twice.

    When calculating potential cost savings from multi-lateral wells, you are using the gross well count. Net to SD, the well count is actually 331 wells. Again, this is a well count on steroids. You also seem to use $500k savings per well. Do you think the market should value the stock now by factoring $2.35 million average well cost? May be a bit aggressive.

    Hope this helps.
    Aug 8 06:16 PM | 4 Likes Like |Link to Comment
  • Halcón Resources: Solid Second Quarter Driven By The Bakken [View article]
    Great - thanks. Sorry I missed the connection.
    Aug 8 01:19 PM | 1 Like Like |Link to Comment
  • Halcón Resources: Solid Second Quarter Driven By The Bakken [View article]
    AnnonymousAlpha.

    I am afraid I missed the earlier part of the discussion - what is Miss Lime's relevance in HK's context?
    Aug 8 12:53 PM | 1 Like Like |Link to Comment
  • SandRidge Energy: Is 30% Correction Enough Of A Penalty For The Weak Quarter? [View article]
    Blackberryman -

    On the buyout potential, I keep asking myself - who are the potential buyers? SandRidge commented that it can lease land in the better parts of the play for $300-$400 per acre, hardly an indication of huge demand; several big players have exited (Shell, Encana) or managed their exposure down (Devon, CHK, HK).

    For a buyout to happen, the business model must work well. And this is exactly the area where there seems to be urgent need for higher clarity. I look at SDT results and SD's Q2 results and wonder if SD's portfolio would show a similar decline profile to SDT's if new drilling stopped.
    Aug 8 09:49 AM | 2 Likes Like |Link to Comment
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