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  • Argonaut Gold Is Undervalued And Could Grow Production By 300% [View article]
    No mention of the political strife at San Antonio mine with local authorities. There is no assurance that mining permits will be granted. Big omission on your part
    Best regards
    Feb 28, 2015. 09:51 AM | Likes Like |Link to Comment
  • Vanguard Natural Resources Bonds - Updated Outlook [View article]
    Just skimmed your aritcle will read later in depth. Forgive me if you covered this.
    I noticed that their hedge coverage increased as a % of projected revenues from their last report. I think this bodes well.
    Also noticed that their distribution coverage increased to 1.2x. That's big and it gives them free cash flow to develop and complete new wells or for acquisitions. I think that is a good reflection on management.
    Looks like the preferreds are in good shape as well
    Best regards,
    Skip
    Feb 18, 2015. 09:40 AM | Likes Like |Link to Comment
  • Argonaut Gold: Recent Developments At Magino And San Agustin Mean Still More Upside [View article]
    So you think A's management are competent capital allocators??
    Jan 28, 2015. 11:31 AM | Likes Like |Link to Comment
  • Argonaut Gold: Recent Developments At Magino And San Agustin Mean Still More Upside [View article]
    Ben,
    Given the company does not have the capital to develop Mangino, do you think it was a wise decision to buy the mine at all? St Augistin seems like a good bolt on acquisition that will be accretive. It seems to add more doubt than certainty. And there is plenty of that at the company with San Antonio. Their IR person categorized San Antonio as a political issue that should get worked out. Hope she is right.
    Jan 27, 2015. 03:40 PM | Likes Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Yep its a speculation!
    I think a dividend cut is inevitable after '15 if energy prices stay this low. That will hurt the stock price (duh) But they will survive and I would expect the stock to recover and more so when energy prices finally recover (if they ever do). It is going to be a bumpy ride. As you said its a speculation.
    consider looking at debt and preferreds of some of these companies. You are higher in the capital stack and should be OK.
    Jan 23, 2015. 03:10 PM | Likes Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Hi,
    Thanks
    Good luck with stopping the relentless selling but today seems like a good start.
    Jan 23, 2015. 03:04 PM | Likes Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Would you be kind enough to actually address the specific you see in MEMP and dispense with your general feelings. I am very interested in understanding what you see. Thank you
    Jan 23, 2015. 03:02 PM | Likes Like |Link to Comment
  • BreitBurn Energy Partners Investment Thesis [View article]
    I disagree with your assertion here. All the guy is saying is that if oil prices remain low for longer than a year, then the company is in real trouble. That is a definite possibility given the borrowing base revision.
    I hope you are right and oil prices recover. I suspect in the long run (whenever that is) you are. But the investment point here is to put your money into companies that have a safe and long runway to allow for energy prices to take off. Doubt this company qualifies.
    Jan 23, 2015. 02:39 PM | 1 Like Like |Link to Comment
  • BreitBurn Energy Partners Investment Thesis [View article]
    Hi,
    Great points. You took the words right out of my mouth.
    Jan 23, 2015. 02:25 PM | Likes Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Note that the hedge position is set forth in the table above. They go out 5 years.
    Jan 22, 2015. 11:42 AM | Likes Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Do you have any numbers to support your assertions? One of the points of hedging is to lock in cash flows that can support the debt. The LOC is due in '18. The notes are due in '21 and '22. There is only $301m outstanding under their line. Even if their borrowing base is cut 60% to $560m, they still cover their line. I don't see this company in a debt bind. What are you seeing that I don't?
    Thanks
    Jan 21, 2015. 03:56 PM | 1 Like Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Thanks very much for that great piece of work.
    At $16, the stock is trading at about 1.4x BV. I am always skeptical of companies buying back stock for above BV. The true fair value of the company is a hard number to determine and managements always tend to be overly optimistic. Have you done a valuation on the business?
    I agree with you that MEMP has done the best job of hedging and really sticking to the game plan. Would not it make more sense to make very accretive acquisitions rather than buy back stock?
    Of course the other intriguing investment opportunity is the senior debt. I looked at it and it does not trade - I found the securities but nothing trading on fidelity. I did buy some VNR debt and a lesser amount of preferred. The MEMP debt is attractive because it has very little bank debt in front of it.
    Thanks again and best regards,
    Jan 21, 2015. 03:41 PM | 1 Like Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    Nice to hear from you again. The answer is the hedges are pretty solid. It is the company's policy to only undertake hedges with banks who are part of their line. Under the ISDA contract the counterparties have the right of offset in the event that one defaults. Per their 3Q14 10Q, the company says that after taking into account the right of offset, they do not have any counterparty exposure related to their derivative exposure.
    I was unable to find the names of the banks participating in their $2.0B LOC but I would suspect they are the usual cast of big banks. So there is risk there but given the right of offset, I would accept the counterparty risk as an investor. It would not be a reason to to not buy the stock.
    Hope that helps. Let me know if you have any additional insight.
    Best regards,
    Jan 21, 2015. 03:18 PM | 1 Like Like |Link to Comment
  • Memorial Production Partners: A Well-Hedged, High Yield Speculation On The Recovery Of Energy Prices [View article]
    The point of the thesis here is that the company should survive an extended period of very low energy prices. The upside is limited however. But as energy prices rise, the stock price will go up. Also going out 4 years, their hedge coverage is lower so higher spot prices would increase revenues. Lastly there is increased production. My analysis assumes flat production. The company has lots of growth opportunities. At this time, that increased production is unhedged and would benefit from higher prices.
    But I stress the point is not about upside, it is protecting the downside.
    Jan 21, 2015. 12:22 PM | 3 Likes Like |Link to Comment
  • Vanguard Natural Resources' Shaky Distribution [View article]
    Rather than revert to prayer, one might consider selling the common and buying the debt or the preferred. The debt currently yields 8.9% with a 10.9% YTM. Looks to me like a dividend cut is certain based on current prices and their hedge positions. The debt puts you in a senior position behind their line. I think VNR should be able to cover their interest expense even at these low prices.

    If you want to speculate on a common in this space, MEMP offers a much better hedge position and yields about 14.5%. I should have a positive DCF out 5 years, although greatly reduced. But the stock price should recover when energy prices do. Its a long term speculation.
    Jan 20, 2015. 03:54 PM | 1 Like Like |Link to Comment
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