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Richard Zeits  

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  • Continental Resources: What Oil Price Is Discounted In The Current Stock Price? [View article]
    Lol wut,

    "In today's pricing environment you cannot pay more than $10-$15 per PDP barrel of oil reserves."

    I am not sure many industry practitioners would subscribe to that.

    Here is the issue: how do you define "today's price environment" if Brent was $110 per barrel eight months ago, below $50 a week ago, and moved with a $10 per barrel amplitude over the past five trading sessions.

    Being too mechanical in your method may lead to seemingly "correct" calculations that are nonetheless in complete disconnect from the market's more strategic thinking.
    Feb 5, 2015. 10:45 AM | 1 Like Like |Link to Comment
  • Zeits Crude Oil Update: Latest EIA Data Reveals High Rate Of Oversupply [View article]
    Mpmassey,

    Good feedback, thank you. I am working on a "design upgrade."

    Generally, I feel that raw industry stats are difficult to interpret for a non-specialist (or even a specialist in the absence of some analytic framework). Is a 5 million barrel build too much or too little? Is the announced data set a reason to panic or is it just "noise well within the normal level?"

    I am trying to provide a set of simple, visual tools (combined with discussion) that would make sense of the headline data.

    Feedback is most welcome.

    I hope to post these notes regularly, but they may not be "tagged" to any stock symbols. I would encourage interested readers to sign up for "author alerts."
    Feb 5, 2015. 10:29 AM | 1 Like Like |Link to Comment
  • Southwestern Energy: The Benefit Of Preserving A Strong Balance Sheet [View article]
    I guess the answer is competition. In order to grow they need to produce more. If they don't grow, they marginalize themselves relative to every one else who grows at 30%-40% per year.
    Feb 5, 2015. 10:05 AM | Likes Like |Link to Comment
  • Continental Resources: What Oil Price Is Discounted In The Current Stock Price? [View article]
    Lo wut,

    I would caution against potentially overlooking other assets and operational capabilities that go well beyond proved reserves.
    Feb 5, 2015. 10:03 AM | Likes Like |Link to Comment
  • Zeits Crude Oil Update: Latest EIA Data Reveals High Rate Of Oversupply [View article]
    Cashewking,

    The U.S. and Canada are producing a growing volume of oil and NGLs. In addition, refineries and marketers import oil buying it on the open market worldwide. As a result, storage is building up.
    Feb 5, 2015. 09:49 AM | 1 Like Like |Link to Comment
  • Continental Resources: What Oil Price Is Discounted In The Current Stock Price? [View article]
    Profit Propositions,

    I don't think a simple single-number answer would be a correct framework to think about it - companies adapt to the environment, plays evolve, investors learn to price assets "through the cycle." But as I wrote, if I knew that the price of oil ill average $70 per barrel over the next decade, I would have to think hard about the upside. At $95 per barrel, that upside is visible even in the SEC-10 figure, let alone other potentials.
    Feb 5, 2015. 09:42 AM | Likes Like |Link to Comment
  • Zeits Crude Oil Update: Latest EIA Data Reveals High Rate Of Oversupply [View article]
    Fritz68,

    Indeed, total petroleum inventories peaked in late July 2009 at 1,123 million barrels. However, I would need to look at it on a seasonally adjusted basis (as of that time) to tell you when the real peak occurred.

    Crude inventories were very high in both February-March 2009 and in late July.

    Please keep in mind the floating storage that peaked in Q1-Q2 2009.
    Feb 4, 2015. 09:39 PM | 2 Likes Like |Link to Comment
  • SandRidge Permian Trust: Oil Volumes, Price Realizations Disappoint [View article]
    DAVE22Q,

    I don't think capex or credit are really relevant in PER's case. The Trust does not and will not have debt. It's cost to drill wells is zero (besides almost all the wells have already been drilled and are producing). But your point with regard to hedges buying little "protected" time is very valid.
    Feb 4, 2015. 07:36 PM | 1 Like Like |Link to Comment
  • Oil & Gas Stocks: Is The Sell-Off A Reaction To Old News? [View article]
    Blackberryman:

    I just posted an update

    http://seekingalpha.co...
    Feb 4, 2015. 04:47 PM | Likes Like |Link to Comment
  • Oil Supply Accelerating - Saudi Arabia Delivering On Its Promise? [View article]
    Just posted an update that is relevant to the above discussion:

    http://seekingalpha.co...
    Feb 4, 2015. 04:41 PM | 1 Like Like |Link to Comment
  • Oil & Gas Stocks: Is The Sell-Off A Reaction To Old News? [View article]
    Just posted a full update here:

    http://seekingalpha.co...
    Feb 4, 2015. 04:27 PM | Likes Like |Link to Comment
  • Oil And Gas Stocks - Did We Just Pass The Inflection Point? [View article]
    Just posted an update here:

    http://seekingalpha.co...
    Feb 4, 2015. 04:27 PM | Likes Like |Link to Comment
  • Continental Resources: What Oil Price Is Discounted In The Current Stock Price? [View article]
    Scooter-Pop,

    I would watch the big rigs - those that are in the Middle East, Russia or float around. That's where the supply dynamics are determined. I feel intuitively that in the meantime the US production will keep growing little by little (in absolute terms).
    Feb 4, 2015. 09:16 AM | 3 Likes Like |Link to Comment
  • Continental Resources: What Oil Price Is Discounted In The Current Stock Price? [View article]
    Clayton,

    The company provided its PV-10 estimate (which I presume is based on the SEC price case). This estimate is based on the company's detailed "insider" models and therefore is a very valuable data point. By the nature of the SEC disclosure, I also expect it to be reasonably conservative.

    The SEC price case is obviously very different from the current futures strip, and one of my points was to put the PV-10 value in a relevant context (which is not in the press release, for some reason).

    Your point that we are currently nowhere close to the $95/$4.50 price deck is very valid. However, I personally would not bet my head on "it could be years before these prices are reached again." The price of oil moved by $9 per barrel in the past four days alone.

    Structurally - and it's my personal opinion, of course - I cannot rule out $100+ oil prices within a year from now and nat gas prices above $4.50 within three years from now (as one of probable scenarios).
    Feb 4, 2015. 08:31 AM | 5 Likes Like |Link to Comment
  • Oil And Gas Stocks - Did We Just Pass The Inflection Point? [View article]
    Alex, thank you for pointing it out, a typo - will fix shortly. Kind regards, Richard
    Feb 3, 2015. 03:35 PM | 2 Likes Like |Link to Comment
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