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  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    22023171,

    Thank you for the patience reading this lengthy note and for the kind word. Great observation on the Tapstone's purchase (by the way, I posted a lengthy discussion piece with well data on that transaction under "Mississippian Lime/Tom Ward" title last week - to the extent you have not seen it yet).
    Apr 3 06:21 PM | Likes Like |Link to Comment
  • Midstates Petroleum: CEO's Departure And Curious Math Of The Mississippian Lime [View article]
    220232171,

    Thank you for very thoughtful points. This is a very interesting discussion but I am afraid it has become more focused on SD.

    May I refer you to my another post that just came out on SandRidge (this morning). You may even repost your comments, they are terrific, even though I take a somewhat different angle - I am sure there will be a more lively exchange of opinions there.

    Again, thank you very much for commenting.
    Apr 3 06:02 PM | Likes Like |Link to Comment
  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    Bikerron1,

    I think it is a bit early to draw the final conclusion before finishing the analysis. Frankly, we should review all the wells for their performance - do the analysis from bottom up. There are many wells, but it can be done.

    Going from top down, I am very concerned by the fact that the company has to outspend its internal cash flow by $1 billion to generate a 26% production growth this year.

    When I look at companies like Kodiak and Cabot, I see that they grow fast. But they do so by spending essentially within their cash flow this year. That tells me that their assets are economic and generate strong returns that I can verify just by looking at corporate financial metrics. I have difficulty doing the same for SD.

    As to what this play has got going for it, there has been one big thing - terrific capital inflow. SD alone raised $2.3 billion re-selling undeveloped acreage via JVs and Trusts to Repsol, Atinum and many individual investors. Chesapeake raised $1 billion from Sinopec. Devon raised $2.2 billion from Sinopec, most of which went into the Miss and the underlying Woodford. Midstates raised money from bond markets... I can continue the list. Just adding across, it's $6-$7 billion in these transactions alone. Assuming average cost per well of $4.5 million (D&C + infrastructure), this is ~1,500 wells. Passive investors from outside paid for the vast majority of horizontal wells drilled in the play. From this perspective, the play has worked remarkably well.

    Now we need to see - by analyzing drilling returns - if it can stand on its own. IMO, the jury is still out.
    Apr 3 05:47 PM | 3 Likes Like |Link to Comment
  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    Craps2007,

    The Trust I (SDT) has all its leases in Oklahoma, none in Kansas (which is discussed above).

    The Trust II (SDR) has leases predominantly on the Oklahoma side as well, although there are select locations in Kansas. In Comanche, I can see two sections that may or may not be in the "gassy" area (I frankly doubt they are). Other Comanche locations are in the north-west corner that I discussed in the article and will profile in full detail in my next post.

    Unfortunately, neither SDT nor SDR provide a list of their wells which makes the analysis and verification difficult. In fact, I have found their disclosure very shallow.
    Apr 3 04:46 PM | 2 Likes Like |Link to Comment
  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    Mary,

    I do understand your point and I agree, Alfalfa and Grant (and every other area for that matter) should also be reviewed with similar attention and detail if we really want to learn something. I just cannot provide everything in one note. (It is a lot of meticulous work, may I mention. I would welcome you help.)

    I am not so sure if Alfalfa is a "sweet spot" as you suggest. I would like to review the facts first before reaching a conclusion. Alfalfa is the area of the most active drilling, but the economics of it is a totally different issue. Also, I disagree that Comanche "is mainly gas." What do you mean by that?
    Apr 3 03:25 PM | 2 Likes Like |Link to Comment
  • Midstates Petroleum: CEO's Departure And Curious Math Of The Mississippian Lime [View article]
    22023171,

    Good points. On SD I disagree though - SD did depend on Repsol, Atinum and two Royalty Trusts for $2.3 Bn in net proceeds from what was essentially a super-profitable acreage quick-flip (compared to the company's $3.2 market cap). And SD will depend on some sort of mechanisms that would allow activists to exit (Omega, TPG-Axon, Prem Watsa - just to name a few).
    Apr 3 02:48 PM | Likes Like |Link to Comment
  • Apache Emerges As The Most Active Driller In East Texas Eagle Ford - Read-Across To Halcon, Clayton Williams And Comstock [View article]
    TOT,

    Thank you for taking the time (and patience!) to read. And thank you for great comments.

    Regards,

    Richard
    Apr 3 02:39 PM | 1 Like Like |Link to Comment
  • Apache Emerges As The Most Active Driller In East Texas Eagle Ford - Read-Across To Halcon, Clayton Williams And Comstock [View article]
    Pablomike,

    Shorter laterals, smaller frac jobs, vertical integration for CWEI, a bit shallower depths, different landing point. Also, it's CWEI I guess.
    Apr 3 01:25 PM | Likes Like |Link to Comment
  • Midstates Petroleum: CEO's Departure And Curious Math Of The Mississippian Lime [View article]
    22023171,

    This is a great observation. There is always funding for a good team. The question that I ask myself, the history of the Mississippian (and here I also include other intervals) shows that the recent success stories, including SandRidge, were very heavily dependent on the availability of an eager buyer of undeveloped assets at a premium price. Can the play stand on its own and earn a competitive return organically if there is no exit option of this nature?
    Apr 3 12:54 PM | Likes Like |Link to Comment
  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    Stocks_watcher,

    I do, there is half a dozen names if I recall correctly, all private and some would be very well known in Kansas. To answer your question though, I would have to go through the database.
    Apr 3 12:46 PM | Likes Like |Link to Comment
  • SandRidge Energy: Sweet Spots And Duds Of The Mississippian Lime [View article]
    Mary,

    Actually the sentence did not imply Comanche, it implied the entire company-wide inventory. In Comanche, assuming for illustration that the gas sweet spot's core is one township in size and supports four wells per section, the entire opportunity set would be ~140 wells (if that - there are lease geometry limitations, fracturing, etc.). Let's assume that SD controls one-third of those locations and has already drilled 20 wells, how many are there left? I will leave it to you to change the assumptions as you see fit.
    Apr 3 12:43 PM | 2 Likes Like |Link to Comment
  • Ultra Petroleum Vs. Bill Barrett: The East Bluebell Conundrum [View article]
    APB,

    Actually, an outright sale seems to make more sense to me. BBG has a large opportunity in the Niobrara and needs cash, the Uinta asset is underutilized. UPL is a larger company and needs a larger footprint in the Uinta for the asset to impact the perception of the stock.
    Apr 2 11:22 AM | 1 Like Like |Link to Comment
  • Bakken: Who's Got The Most Productive Wells? [View article]
    I just read Barron's article that you mentioned. Frankly, I am a bit surprised by the quality of the argumentation presented in it. I think it is good provocative journalism but also a questionable editorial decision to put on the front page something that frankly appears to be a very amateurish material.

    It would take long time to comment on each of the article's arguments one by one - not sure it would be time well spent here. But just to address a few. The SPR is a rounding error as a source of price stabilization for the world's crude supply (and it's not its purpose). So is the U.S. shale oil at the moment. The article completely ignores the real price-stabilization mechanism - OPEC who has been the swing supplier over the past decades (not Russia, not deepwater, not horizontal oil).

    Barron's natural gas parity argument does not make much sense either. What is the barrel-per-day equivalent of diesel/gasoline engine displacement with natural gas engines? It's been very low and it is already reflected in the supply-demand balance and current oil price. Will the pace of displacement change unexpectedly? Certainly not with $75 oil.

    Forecasting oil prices is a difficult task. Commodity prices have been notoriously volatile and will remain volatile. This article in Barron's, however, is not the source I would go to for answers.
    Apr 2 04:06 AM | 2 Likes Like |Link to Comment
  • Bakken: Who's Got The Most Productive Wells? [View article]
    Pablomike,

    Great observation on Oxy. I do not have an answer without looking into details.

    I don't think that a choke regime alone would result in such a major impact. However, there are many areas in the Bakken that have relatively unimpressive IP rates but shallow declines. I've seen some well that had produced more than half a million barrels being pumped a very low flat rates for many years.

    On the other hand, certain other areas are strongly overpressured, with production front-loaded (FBIR, South Antelope, etc.).
    Apr 2 03:39 AM | 1 Like Like |Link to Comment
  • Clayton Williams Energy: Asset Sale And Latest Well Results [View article]
    Jersey27fan,

    I do not know who the buyer was, but I don't think that the acquisition would be considered material for HK to make it a disclosure event. I certainly would not rule out HK as a possible acquirer.

    It is also not obvious if there is one sole acquirer - there may be more than one package.

    But I am also interested to know who the buyer was - would welcome insights.
    Apr 1 04:38 PM | Likes Like |Link to Comment
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