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Richard Zeits

 
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  • Can EOG Resources Grow At 25% With Oil At $65? [View article]
    Pablomike,

    The previous cycle showed that existing rig contracts often survived. Oil service contracts tend to be softer on average. There is no doubt, however, that the supply chain pricing will soften. Pressure pumping is likely to be the first to be hurt and the most to be hurt.
    Dec 10, 2014. 05:30 PM | 1 Like Like |Link to Comment
  • Natural Gas: A 'Soft Landing' Scenario [View article]
    Curious O&G Investor,

    The current price is still within what I would call a soft landing range (that I would define as $3.50/MMBtu-$4.50/MMBtu). Having said that, the "signal" to the industry to slow down is obviously harsher and is taking place earlier in the season (as I argued, we still have 9 months before containment by storage capacity).

    It is difficult to say how many Bcf/d need to come off line - it is also a function of the winter weather demand. It appeared to me that the volume was minimal, perhaps 1-2 Bcf/d - certainly can be taken care of via natural declines.

    I should get my thoughts together and post an update note.
    Dec 10, 2014. 05:07 PM | 1 Like Like |Link to Comment
  • Can EOG Resources Grow At 25% With Oil At $65? [View article]
    Hammer1,

    Good point. I will try to cover in the next note. I would just say here that published PV-10 use flat price decks. The market should be able to discount the expected cyclicality of the commodity price in stock valuations. So I am not sure that investors will blindly follow last quarter's EBITDA or the PV-10 without giving some consideration to the longer-term macro outlook.

    However, the latest decline gives a very vivid illustration that taking $100 per barrel oil for granted may be a mistake. It also appears that the new paradigm is yet to crystallize in investors' perception.
    Dec 10, 2014. 12:44 PM | Likes Like |Link to Comment
  • Can Continental Grow At 25% With Oil At $65? [View article]
    Looiesoccer23,

    I would not rush to conclude that EOG sells at local price point - don't forget that EOG was one of the early adopters of crude by rail and has a strong marketing department.

    Also, I am not sure where the -20% IRR estimate comes from. I actually think it is very incorrect.
    Dec 10, 2014. 12:01 PM | 2 Likes Like |Link to Comment
  • Can EOG Resources Grow At 25% With Oil At $65? [View article]
    Aemac,

    I am not sure I understand your concern. I don't think any facts are misstated (the article above says "the majority" of assets in Canada are being sold, and so does the company's press release). Besides this is just a reminder to readers that divestitures remain a source of capital and are still possible, despite the decline in the price of oil. Readers who follow EOG have likely seen both the headline and read the press release - no need to copy and paste the entire press release here, IMO.
    Dec 10, 2014. 11:53 AM | 3 Likes Like |Link to Comment
  • Can Continental Grow At 25% With Oil At $65? [View article]
    Tim,

    Again, I don't think one can yet say that this is "growing fro growth's sake." The company has a certain set of opportunities that are NPV-positive (depending on your assumptions). So as long as the company has reasonably-price financing, there is nothing wrong with drilling NPV-positive wells. Leverage (as in safe leverage) is the limiting factor.

    Buying back is a gimmick in most cases. Since it is an equivalent of paying dividend, I don't think opportunity-rich E&P companies should be paying dividends (or gamble in the stock market - this is not what management is there for; they are there to operate the assets).
    Dec 9, 2014. 09:17 PM | 2 Likes Like |Link to Comment
  • SandRidge Permian Trust: Stress-Testing At $50 Per Barrel [View article]
    Daan Everts,

    I would not call it a transfer. I would call it: Common units are the first in line for distribution up to the Subordination Threshold. So I guess the answer is yes, that's what the spreadsheet is designed to calculate.

    So, for example, if you look at my "$60 per barrel" case, distribution per common unit in Q2 2015 is $0.36(2). If you multiply that by 39.375 million common units outstanding, you will get $14.263 million. That's all that is available for distribution, under the model. Sub units get nothing.
    Dec 9, 2014. 09:12 PM | Likes Like |Link to Comment
  • SandRidge Permian Trust: Stress-Testing At $50 Per Barrel [View article]
    Daan Everts,

    Again, I would recommend that you run my production volume assumptions through your own model spreadsheet and see where the difference is. All my figures are in front of you, I am not hiding anything.

    Could there be a glitch in my spreadsheet or an assumption that you might disagree with? Of course, human error is always a possibility (if there is any anywhere, I apologize in advance) and judgment is often subjective. However, I do not sense that you have done the calculation and therefore have left yourself guessing. It really is a simple spreadsheet, it would take five minutes to build if you are doing it for just one quarter - would be delighted to compare notes when you have the result.
    Dec 9, 2014. 01:22 PM | 1 Like Like |Link to Comment
  • Can Continental Grow At 25% With Oil At $65? [View article]
    Reach,

    Delaying maga-projects by several years (and, importantly, increasing hurdles for new projects) would be a very favorable outcome for a producer like SA. Let's not forget about the demographics. Demand continues to grow. So a sharp pain for a year may mean oil price higher for longer. And as Scooter-Pop suggests, Russia's economic crisis may be an unintended consequence but would delay many massive projects for a very long time (let's not forget, many of those projects have the purpose of spending budget money, not making profit).
    Dec 9, 2014. 08:55 AM | 1 Like Like |Link to Comment
  • EQT Corp: A Monetization Of GP Interest In EQT Midstream Partners May Be On The Way [View article]
    Wignewton,

    I don't think there are major implications for EQM. I hope to post a more detailed update shortly.
    Dec 9, 2014. 08:44 AM | Likes Like |Link to Comment
  • Can Continental Grow At 25% With Oil At $65? [View article]
    Vibro1,

    "...the remaining working interest will not work out given to pay off a well's depreciation (90%) the first year..."

    90% depreciation in the first year? CLR must have refocused on the Miss Lime... :)
    Dec 8, 2014. 09:28 PM | 4 Likes Like |Link to Comment
  • I Wouldn't Get Used To $65 Oil [View article]
    TOT,

    I am afraid a lot of people feel the same way. This has been one VERY STEEP correction. Brings in me memories of September and October 2008.
    Dec 8, 2014. 08:48 PM | Likes Like |Link to Comment
  • SandRidge Permian Trust: Stress-Testing At $50 Per Barrel [View article]
    Daan Everts,

    Are you getting different numbers for 2015 when you run my assumptions through your spreadsheet?
    Dec 8, 2014. 07:41 PM | Likes Like |Link to Comment
  • SandRidge Permian Trust: Stress-Testing At $50 Per Barrel [View article]
    Daan Everts,

    Oil hedges are the driver. You may find it interesting to compare across different scenarios.
    Dec 8, 2014. 05:26 PM | Likes Like |Link to Comment
  • Can Continental Grow At 25% With Oil At $65? [View article]
    Tiekone and Zimmerit,

    I would give CLR some credit. Drilling wells is not the only component of capex and costs. Growing production at a 30% rate per year is not bad at all. That said, the return estimates deserve very close analysis, of course.
    Dec 8, 2014. 05:14 PM | 3 Likes Like |Link to Comment
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