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Richard Zeits

 
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  • Cabot Oil & Gas: A Stranded Giant [View article]
    Dnpvd51,

    I do not know who Bill Powers is, but the 50 TCF estimate looks off by an order of magnitude. Personally, I believe that Cabot's 30-40 Tcf resource potential estimate for their acreage alone is very credible. In fact, it may prove conservative in the long run. Several other operators estimate their resource potential in the same neighborhood: RRC, AR, EQT, CHK, etc. Then there are many operators with smaller but still very significant positions: NBL, CNX, Seneca, SWN, STATOIL, Chevron, Shell, XOM, UPL, APC, RICE, MHR, REXX, and a whole number of others... There is a lot of gas out there.

    With regard to COG not being profitable, I don't think it is accurate. Each of their wells is incrementally profitable (in cash terms) on average, based on their disclosure.
    Jul 28 08:42 PM | 4 Likes Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Heisoktoday,

    Great point indeed, the Warren/Citrus deal highlights the valuation.

    Just to add my 2 cents on that specific transaction, if I recall correctly, the deal included significant developed reserves (something like 115 Bcf). If I put an $1.50/Mcf value on that, the value of PDP reserves comes out at ~$175 million. I do not know if there is any significant infrastructure or contracts attached.

    Citrus' acreage block is contiguous but small (something like 5,300 net acres, if I recall correctly) and located outside the "core of the core" area dominated by Cabot. I do not know how many identified locations remained on Citrus' acreage, but assuming 30 to 50 "virgin locations" in the Lower Marcellus (prior to aggressive downspacing), it looks like Warren paid a lot per core location.

    Cabot's well results have been vastly more impressive than Citrus.' The deal indeed speaks very much in favor of Cabot's asset value.
    Jul 28 06:51 PM | 1 Like Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Beebaggage, great color, thank you.
    Jul 28 06:41 PM | 1 Like Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Nick123456,

    You might be right, permitting in the Northeast is always a tricky process. I should post a more detailed note with an update on the project's progress - there are indeed many moving parts. I should also note that the project has some options to modify the route to avoid points of toughest resistance if needed.

    I do not know about 2017, but several months of delay are already baked in, in my opinion. For my modeling purposes, I am currently estimating a mid-2016 in-service date.

    Would welcome any additional insight that you might have since you are "on the ground."
    Jul 28 04:25 PM | 1 Like Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Lambspring,

    I agree, short-term concerns vs. long-term upside is a trade-off here. And I could not agree more, the asset is truly extraordinary.

    With regard to the marketing of the stock, I personally kind of like COG's conservative posture in investor communications.
    Jul 28 03:46 PM | 1 Like Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Beabaggage,

    Thank you for pointing out EQT's Utica effort. I just posted a note on the topic - it should be available for free viewing tomorrow morning. Just one comment - the Utica the EQT is targeting is likely to be very dry.

    To add to the energy discussion in the Northeast, here is a link to another detailed note ("The U.S. Should Build East Coast LNG Capacity"), in the event you have not seen it yet:

    http://seekingalpha.co...
    Jul 28 03:41 PM | 3 Likes Like |Link to Comment
  • Sanchez Energy: Critical Mass In The Eagle Ford [View article]
    Scooter-Pop,

    Stranger things have happened, but I think that anyone who wanted to purchase Sanchez's largest single asset - Catarina - could do so very recently and at a very reasonable price. Given the company's asset profile, it belongs more logically in the publicly traded domain, in my opinion.

    That said, if Sanchez demonstrates a well performance turn-around in Catarina and proves up additional acreage in Marquis, the portfolio's attractiveness may improve substantially. I think we are talking of at least a year of active operations though.
    Jul 28 02:04 PM | 3 Likes Like |Link to Comment
  • Cabot Oil & Gas: A Stranded Giant [View article]
    Scooter-pop,

    Thank you for reading. I personally think that the asset has much upside at current price and management has done an impressive job producing the highest EUR per foot. In brief, yes (even though XOM already has the XTO vehicle in its organization).
    Jul 27 03:20 PM | 1 Like Like |Link to Comment
  • Antero Resources: Rich Valuation Represents A Risk [View article]
    Lambspring,

    This is a good point.

    Let me just note, it is almost a given that Sponsors have to stay onboard through the IPO. It is not customary for a sponsor to sell out in the IPO, even if the desire were strong. The market would look at it as a negative signal and the IPO would simply not happen. Moreover, underwriters ask for lock-ups.

    Another thought, it is very difficult to predict how long the Sponsors intend to stay invested and why. The sponsors have already made their awesome returns. New investors, who are considering whether or not to put scarce cash into the stock today, at ~$60 a share, have to think about their own risks, rewards, and motivations. Not WP's.
    Jul 26 08:16 PM | 3 Likes Like |Link to Comment
  • Antero Resources: Rich Valuation Represents A Risk [View article]
    Danteodor,

    Thank you for your detailed, thoughtful comment. Just a few observations.

    I believe I did factor in the value of the company's hedge book when I used the company's $0.5 billion estimate as of 6/30/2014. This estimate uses "SEC pricing" based on Marcellus benchmarks, again, as per the company. Do you believe anything should be added beyond that?

    I do not think of the Chenniere contract as a hedge - my understanding it is a sale & purchase agreement at market.

    I also factored the value of the midstream assets into the valuation - at 1.5x book value as of 3/31/2014. One might argue that such valuation is too low but, in my opinion, one of the reasons why MLPs are valued richly is that value is effectively transferred out of the parent (effectively, a liability assumed via long-term guaranteed throughput contracts and pricing arrangements). CHK would be a good example of what happens in the aftermath (the Haynesville midstream assets, for example).

    You also suggest that one should "assign some rational value to the stake in the midstream infrastructure MLP spun off earlier this year." Has it been spun off? And again, I believe a rational value was captured in the $1.2 billion estimate.

    On the comparison vs. Cabot - COG also has a large portfolio of transportation agreements (Constitution, Sunrise, etc.). So does EQT. I don't think AR has a silver bullet necessarily.
    Jul 26 11:34 AM | 5 Likes Like |Link to Comment
  • Rice Energy Acquires Chesapeake's Marcellus Package: Analysis [View article]
    Alessandro,

    Generally speaking, I see advantages in tight management controls that are typical for privately-held companies versus large corporate bureaucracies that may be wasteful and suffer of will paralysis.

    However, every company is different. I've seen family-controlled companies go bankrupt too.
    Jul 25 11:12 PM | Likes Like |Link to Comment
  • Rice Energy Acquires Chesapeake's Marcellus Package: Analysis [View article]
    Paulson545,

    EQT announced yesterday it would drill a deep Point Pleasant test in Greene County in Q4. May or may not be a read-across to Rice. (Although, it is not fully obvious if Rice has leased Utica rights. Even less obvious if EQT will be successful).
    Jul 25 07:21 AM | Likes Like |Link to Comment
  • Rice Energy Acquires Chesapeake's Marcellus Package: Analysis [View article]
    James,

    My understanding is that Rice spent $100 million in cash on the JV buy-in in January, rest of it was in stock, if I recall correctly. I assume that $100 million is part of the $385 million budgeted for "organic" acquisitions. I have to double-check to be sure.

    With regard to your second question, I have not thought about what they might need in terms of financing for next year. I think, actually, their budgeting process will go in the opposite direction - they will figure out how much funding they can source and tailor the drilling & infrastructure plan accordingly. A substantial portion of the budget is designated for the midstream. It would not be surprising if those assets will actually become a source of funds at some point, possibly in the near future.
    Jul 25 07:14 AM | Likes Like |Link to Comment
  • Rice Energy Acquires Chesapeake's Marcellus Package: Analysis [View article]
    Richard48,

    I think of CHK being an ~$30+ Bn company once you factor in debt and off-balance sheet commitments (such as take-or-pay gathering contracts).
    Jul 25 07:02 AM | Likes Like |Link to Comment
  • Rice Energy Acquires Chesapeake's Marcellus Package: Analysis [View article]
    Paulson545,

    You are making an interesting point. Even if no supply interruption from Russia, European media and official statements are already full of concerns regarding lack of risk management as it relates to nat gas supply.

    In lieu of a comment, may I refer to this note I posted few days ago - exactly on the topic:

    "The U.S. Should Build East Coast LNG Capacity

    http://seekingalpha.co...
    Jul 25 06:48 AM | Likes Like |Link to Comment
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