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Richard Zeits  

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  • Halcón Resources: Eagle Ford Update - July 2015 [View article]
    Scooter-Pop,

    Service providers typically have strong protections in their contracts and can recover what they are owed. I don't think it's necessarily cash upfront.

    I would also note that HK has excellent hedges in place this year, so internal cash flows are quite strong this year and early-time well productivity in the Bakken appears very strong. Let's see what they say in the Q2 report.
    Jul 17, 2015. 03:34 PM | 4 Likes Like |Link to Comment
  • Halcón Resources: Eagle Ford Update - July 2015 [View article]
    Turkish71,

    Thank you for the kind word. I obviously have all the well data for all relevant players but formatting is quite time-consuming. I hope to put out an integrated overview at some point.

    In the meantime, I recently posted a detailed review of CRK's well results. I have also profiled CWEI's well results in the Giddings.
    Jul 17, 2015. 03:29 PM | 3 Likes Like |Link to Comment
  • WPX Energy: A High Quality Acquisition At A High Price [View article]
    Raw Energy,

    A great point. In fact, WPX stated that they plan to sell non-core assets, including possible additional sell-downs in the Piceance, similar to the transaction you are referring to. The Permian should be a candidate for sell downs of "production tails" too.

    The trick, of course, there are lots of assets for sale and cash is king. "Attractive price" may be an elusive concept.
    Jul 17, 2015. 12:02 PM | 2 Likes Like |Link to Comment
  • WPX Energy: A High Quality Acquisition At A High Price [View article]
    Smr1954,

    I do not disagree. It still is a new operating area for WPX. Also, integrating such a major acquisition would be a challenge for any organization, I would not overlook this risk.

    I am not familiar with the terms of employee retention agreements, but motivating RKI's core team to stay onboard and perform may be not inexpensive. I would guess that the sale has triggered some major payouts.

    Also, may I ask you, where do you see WPX's G&A next year?
    Jul 17, 2015. 11:42 AM | Likes Like |Link to Comment
  • Sanchez Energy: Catarina Continues To Perform Above Expectations [View article]
    dhdhoora,

    Forecasting commodity prices is always a tough exercise. On the NGL front, help is on the way indeed in the form of additional petrochemical capacity and exports from both the Gulf Coast and East Coast. Still, supply appears to be very powerful and overwhelming. I personally am not counting on a certain relief. Same is indeed true for oil and gas. That being said, drilling returns have also improved dramatically. I am not sure one needs prices as high as 18 months ago to do very well if assets are of a high quality.
    Jul 17, 2015. 10:21 AM | 2 Likes Like |Link to Comment
  • Sanchez Energy: Catarina Continues To Perform Above Expectations [View article]
    Hi Nathan,

    A reserve analysis would be a good topic for a follow up note. Too extensive of an exercise to go through in a comment. On my to do list.
    Jul 17, 2015. 10:18 AM | 3 Likes Like |Link to Comment
  • BreitBurn Energy Partners: Why Are The Units Sinking? [View article]
    Thomas,

    Terrific comment, thank you.

    You wrote: "I don't think the higher decline rate shows up in the cost analysis for shale production because the IP rates are so high for the first year that the cost are artificially held down."

    This is a great point. Every shale well becomes a little "MLP" once it matures. Unit operating costs skyrocket, administrative costs skyrocket, etc. That's why many E&P operators like to sell off their mature properties. It's just not easy to find someone to take them off your hand at a good price.

    Please also note that BBEP's cost is "per BOE," not "per barrel." The cost to operate a gas well is typically much lower than the cost to operate an oil well. I wonder, are there wells in BBEP's portfolio that are shut-in candidates at the current price? Do all wells cover their cash costs?
    Jul 17, 2015. 07:54 AM | Likes Like |Link to Comment
  • BreitBurn Energy Partners: Why Are The Units Sinking? [View article]
    Thomas Yeggy,

    The slide you are referring to shows costs per Bcfe. You have to multiply by 6 to get to costs per Boe. Which would get you to something like $50 per boe for BBEP, I guess.

    Personally, I would not use their methodology as it makes little sense - not all costs are relevant. E&P is a cash-on-cash business.
    Jul 16, 2015. 11:54 PM | 1 Like Like |Link to Comment
  • BreitBurn Energy Partners: Why Are The Units Sinking? [View article]
    Thomas,

    Thank you for the data point. I would just caution that the F&D cost is in a somewhat different category. Due to slow declines, MLPs have the option of not spending on new development but still enjoying relatively stable production volumes. F&D cost is not relevant in that context. Production costs, however, are.
    G&A is one of production costs.
    Jul 16, 2015. 08:28 PM | 1 Like Like |Link to Comment
  • Will Shale Oil Follow In The Footsteps Of Shale Gas? [View article]
    Scooter-Pop,

    Valid concerns, in the U.S. and elsewhere.
    Jul 16, 2015. 08:14 AM | 1 Like Like |Link to Comment
  • Will Shale Oil Follow In The Footsteps Of Shale Gas? [View article]
    Hi Shane,

    Thank you for reading.

    I agree with you, shale oil appears to be an almost exclusively U.S. + Canada phenomenon. Vaca Muerta in Argentina is one of a few examples of international adoption. China has also been making meaningful efforts in this direction,

    It seems to me that significant production from shale outside of U.S. and Canada is still a decade away, for a variety of reasons. But I would be surprised if it were not coming eventually.
    Jul 16, 2015. 07:24 AM | 1 Like Like |Link to Comment
  • BreitBurn Energy Partners: Why Are The Units Sinking? [View article]
    Michaelprince1977,

    I think, actually, many things can be done.

    First, distributions can be suspended until commodity prices recover and financial health is restored.

    Second, capex can be cut to the bone (BBEP has already done much of that but some reserves, I am sure, remain).

    Third, G&A can be reduced - the most effective element of self-help.

    With regard to the Permian sale, I will try to cover in a separate note. A two-edged sword in the current environment. But the company, I am sure, is working hard to maximize its value and be smart about it.

    Ultimately, it is indeed all about commodity prices. Almost all - it is also about surviving through the trough and seeing the upcycle.
    Jul 15, 2015. 08:08 PM | 4 Likes Like |Link to Comment
  • Will Shale Oil Follow In The Footsteps Of Shale Gas? [View article]
    9115741,

    M&A is difficult. Acquisition prices are very high relative to the futures strip. Most importantly, international oil companies have not proven to be able to compete with U.S. independence in terms of operational skill and cost. Some Oil Majors have failed miserably. So there is double hurdle for acquisitions by outsiders. The M&A is active but dominated by independents.
    Jul 15, 2015. 12:07 PM | 2 Likes Like |Link to Comment
  • Diamondback Energy: The Lower Spraberry Shale Success [View article]
    User 3636401,

    Very interesting perspective. Thank you very much for contributing. And thank you for the links.
    Jul 15, 2015. 05:29 AM | Likes Like |Link to Comment
  • Will Shale Oil Follow In The Footsteps Of Shale Gas? [View article]
    Vireoman,

    Thank you for the kind word. Thank you for reading.
    Jul 15, 2015. 05:24 AM | 1 Like Like |Link to Comment
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