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  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    That's just a revolver paydown seconary, a not a deal big enough to prompt any kind of change in thinking regarding a need for Street financing to grow at this time.
    Mar 10, 2015. 12:14 AM | Likes Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    Hey, thanks for that.
    Feb 25, 2015. 03:59 PM | 1 Like Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    ROSE budget effectively says "we don't need investment bankers"
    Sellside loses interest en masse in a free cash flow, low cost, high return, break even at $30 to $40 per barrel name that could grow a lot faster but decided they didn't want to at present day pricing even as in the process they cut their base declines in half 2 years out while preserving the present value of their inventory and their balance sheet and creating the ability to rapidly ramp as prices and costs warrant.
    Feb 24, 2015. 12:22 PM | 2 Likes Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    ROSE 4Q14 Q&A
    Q) Wolfcamp A returns
    A) See slide 8
    Type curve is 550 MBOE for a 5,000' well, this represents what we have out in the public domain
    In the Permian, they asked themselves where can they get the best completions to fulfill drilling obligations (they had to drill the 8 wells they are drilling there this year) so they went to the highest return portions they could go after.
    Q) Upper EFS update and how Netherland Sewell treated the Upper
    A) Same as before (Northern Gates Ranch, Briscoe Ranch) – same as before, looks good where it is thick.
    Have now drilled a 5,000 and a 10,000' lateral at Briscoe, saying they will see if they can get it completed.
    Noted the upper is held by the drilling to the lower so no rush.
    Q) asset sales
    A) might sell Encinal area – EFS, not looking at selling Gaines
    Q) Would the budget look more like the $700 to $800 mm if we are back in the $70 plus
    A) We are thinking we want to live within cash flow in the long term now. See us closure to cash flow. As an industry, we can't keep spending 2x cash flow. It didn't seem to get us much, growing at the rates we were, over the last few years (in the market).
    Q) Permian cost and lateral lengths.
    A) Permian down 20 to 30%, same 5,000'. In the EFS, the laterals are going to be higher, at 7,000 as an average with some 10K wells
    Q) Upper EFS – where
    A) Gates SE – 11 and 3 well Gates E, and 3 wells in Dimmit. Briscoe Ranch could see the uppers done late this year as part of the discretionary $40 mm of the budget but that area is HBP.
    Q) Permian drilling for 2015, at the end of the list, how much acreage will you have delineated in Reeves
    A) Watch the Blue Duck well to the west. And the Rodeo State well to the north, looking at the map, looks like a majority delineated for the WC A this year.
    Q) Production trajectory of guidance over next 2 years
    A) Decline from 4Q14 to 4Q15 – we had as a company 500 wells at Jan 1. About 1/3 of those were drilled in 2014. Some 12 months ago, some just very recent. So base production declines at about 40%. Looking ahead 2 years, those 500 wells will be declining at about 19%. In other words, this takes the base decline by half in this period, so a lot more predictable going forward (so that is all in the guidance).
    Q) Re not having to spend all of that $350 mm in 2016 (he's asking for maintenance)
    A) In 2016, cash flow will be less than 2015 on current price. If they put capital into Gates Ranch they will be able to hold 2016 flat with 2015 for quite a bit less than the $350 mm. Higher prices, program expands, deferrals come off and they grow.
    Call over – tone very neutral from analysts.
    Feb 24, 2015. 12:22 PM | 2 Likes Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    ROSE 4Q14 Q&A
    Q) at what price ramp?
    A) we watching service costs. Not giving a price at this point, but certainly not there today. Won't take us long to ramp back up. Had 80 wells at YE14 (60 EFS/ 20 Permian) that were drilled but not completed. So we could ramp that back up quickly with the right signals.
    Q) 2016 guidance
    A) Wanted to maintain a production level from which we can grow pretty well. We said $350 mm or less. As the wells age, the decline rate comes off and it becomes easier to defend the decline.
    Reiterating that they will spend "up to" $350 mm. To hit the 60 MBOEpd in 2016, they will have to spend a good bit less than $350 mm. This is part of why you listen to calls before you change a rating when the basic logic of the moves isn't completely understood pre call.
    There is a component in the budget for lease extensions. We have been successful in getting lease extensions.
    Zcomment: I have heard it's gotten a lot cheaper to do so of late with lease owners in several plays actually not wanting to get drilled at these prices and therefore offering cheap extensions.
    Q) Budget breakdown
    A) 20% non drilling capex
    $280 mm for drilling and completion – drill and complete 18 wells, most are longer lateral wells in the EFS ($50 mm to drill those (net)). The rest is on completing 10 wells that are already drilled. Those are longer laterals with bigger fracs (so that's $150 mm),
    that leaves about $80 mm (half that is Permian non operated and the other $40 mm is on discretionary dollars).
    Q) Timing of the year
    A) If you divide the budget into quarters, 1Q and 4Q will be high and 2Q and 3Q will be low on spend
    Q) Covenant renegotiation
    A) the debt to ebitda one was the one that is going to give people trouble either this year or not. This is not a waiver, they amended it. It was not difficult, the banks were very supportive. It's not part of the drive to spend less, we have room to spend more, we just don't want to.
    Feb 24, 2015. 12:22 PM | Likes Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    ROSE 4Q14 Notes
    Delaware Basin delineation comments
    3 new completions were slickwater (changed that in 2Q14 from gel)
    Intrepid – south central portion, longest lateral to date. 7 day rate was 1,900 BOepd, 30 day rate over 1700 BOEpd, called the per foot rate of 246 very competitive.
    the other two test expanded foot print of WC A areas
    19 wells completed so far.
    15 wells drilled and awaiting completion.
    129 BOEpd per 1,000 foot with gel (4 wells) vs 290 boepd per 1,000' with slickwater
    New wells outperforming type curve, look for a possible type curve upgrade later this year
    Reserves:
    Lack of reserve growth is function of 5 year rule. They put what would have been PUDs into location count. So when they do ramp back up, as long as they still like those wells (that is, they are economic) they will quickly hit the reserve statement.
    ROSE operates in 2 of the best plays in NAM with low breakeven prices
    EFS recovers almost 50% of reserves in first 2 years so they will spend at CF to hold volumes at 60 MBOepd and await better prices. Covenants allow them to be patient.
    We've been here and seen this before. Have the ability to increase activity quickly in a better price environment.
    Going to Q&A at the 33 minute mark …
    Feb 24, 2015. 12:22 PM | Likes Like |Link to Comment
  • Rosetta Resources - Pulls Back On Reins To Run Another Day - A Pre Call Note [View article]
    Our call notes:

    ROSE 4Q14 Notes
    We simply do not think it is prudent to accelerate now with these prices. 1/3 of reserves of our wells and 50% of PV is produced and generated in the first 2 years of well life. (dear sellside, you're reaction to this is childlike in its simplicity … the reserves are still in the ground, they are opting to be prudent and leave them there, they're not gone, they will be produced at higher prices for lower costs but I digress)
    And I expect the analysts who downgraded the name pre call to completely not care but to like it higher, later down the road.
    Our EFS is economic to $30 per barrel
    Our Wolfcamp is economic to low prices as well
    Noting the financial headroom created by the new covenants (I've been talking waivers, this is a form of waiver)
    Strong liquidity position
    Senior note maturities are out in 2021 to 2024
    Realized oil price was off $24 per barrel sequentially, lower to LLS due to weakness in differentials and an issue with their gatherer.
    We expect oil at LLS – $12 per barrel before hedge. That's back to normal.
    Production guidance for the 1Q, down 10%, down 9 to 10% YoY of 2014, all on decision to defer projects
    Hedges
    Oil – more than 100% hedged (may see some unwind some of that)
    75% of NG covered
    33% of NGL
    In 2016, on a combined basis they are 1/3 hedged, will evaluate more hedges for 2016
    2 Year Plan
    – spend up to $350 mm in each year
    – confirms no Gaines county(Midland) spending
    – Bone Spring projects IRRs dropped too much to focus on that.
    – would rather keep those in inventory instead of prod the BOE's here at low return (and low NPV)
    28 operated completions in 2015 (will drill only 18 wells and will reduce the backlog by 10 to get to the 28 gross)
    Will have up to 2 rigs in both areas
    Sees defending the 60 mboepd level, live within cash flow.
    Service Cost outlook
    – falling at a fast pace
    – in active talks now with vendors
    – 600 rigs off so far, 700 more expected to go down over the next 6 months
    – while costs are off, the rate of return is lower than it was prior to the down so want to preserve locations
    Feb 24, 2015. 12:21 PM | 1 Like Like |Link to Comment
  • California Resources Corp.: Oily Name To Watch [View article]
    Tom - Apologies for the delay, I don't actively monitor comments here. The covenants in the revolver are pretty lenient at 4.5x consolidated debt to EBITDA but they will be beyond that on a TTM basis at YE15 at current oil prices.
    Feb 6, 2015. 10:44 AM | 1 Like Like |Link to Comment
  • California Resources Corp.: Oily Name To Watch [View article]
    SJFarris - I don't see $20 as realistic for any length of time or even as a trough but no, they would not be EBITDA positive at that price given their cash cost structure. Very few names in the US would be. Our oil price prognostications are made on roughly a semi annual basis, the last for 2015 was made on December 24th at $77.50 as an average for the year, starting low and ending higher, much as we saw in 2009. We actually do quite a bit of work on the subject of oil and natural gas prices and have been pretty close over the last few years bu we are long term guys and see periods such as this as opportunities, once prices stabilize.
    Jan 4, 2015. 03:24 PM | 2 Likes Like |Link to Comment
  • California Resources Corp.: Oily Name To Watch [View article]
    Monterey is there, to be sure but not the major focus of the name, as per their road show and quarterly comments.
    Jan 1, 2015. 03:51 PM | 1 Like Like |Link to Comment
  • California Resources Corp.: Oily Name To Watch [View article]
    Ocean - we don't own it. As noted in the article, when oil prices stabilize investors will seek out the unhedged, that have been beat down for that reason along with leverage, and high oil mix. We own 35 names. This is one that we are starting to watch. Book value has little to do with valuing E&P stocks. The balance sheet is covered by our cheat sheet but can be found right at the top of the Q: http://1.usa.gov/1D8tWfK
    Jan 1, 2015. 03:50 PM | 3 Likes Like |Link to Comment
  • Northern Oil & Gas: Oil Price Move Overdone Relative To Oil's Impact On Cash Flow [View article]
    $85 equates to current 2015 Street, get's very close on them to current Street EBITDA so we call that base. We can run a $60 on the current model for 2015 but would ratchet back spending / growth a touch at that level as the operators will go slower there. Not doing a 2016 view at this time as that's not in most peoples time frame for forward valuation. Also, we've been pretty good at getting prices close in the past and don't see $60 as likely next year. A lot of people take the current trend in prices and assume something has changed. We said $100+ was too high all year long and ended 2013 with a 4Q14 estimate of $80 +/- $10 and feel pretty good about that as an average. This is a short term supply issue, very unlike 2008 and overdone to the downside at this point. Our 2015 average WTI price was $92.50 (over the summer of 2014 and still is but will be revised into the mid $80s soon).

    Baseballer - yes, they will be in compliance then too.

    Dan - we added to our TPLM holdings at the close of their call yesterday. Likely they used the remaining 1.1 mm share authorization today.
    Dec 9, 2014. 05:05 PM | 2 Likes Like |Link to Comment
  • Halcon Resources - Q3'14 Volume Beat With Conservative, Balance Sheet Friendly Guidance - A Pre Call Note [View article]
    O2345 - time frame to a sale of what?
    Nov 11, 2014. 05:44 PM | Likes Like |Link to Comment
  • Halcon Resources - Q3'14 Volume Beat With Conservative, Balance Sheet Friendly Guidance - A Pre Call Note [View article]
    A few food for that points on that analogy and on the new plan.

    Thought on TMS is that it was called a core at inception but never one in terms of capex. D&C of 50% Bakken, 40% EFS, 10% TMS.

    TMS wells have largely been successful while the Utica was in a non core portion of the liquids window of that play.

    TMS being scaled back due high well costs vs lower current oil prices and no relief (yet) on service costs.

    It makes more sense to drill quick payback, quick production add wells in the FBIR and SE Williams for less CWC per copy vs current $12 to $13 mm price tag on the TMS. In the meantime, they have 3+2 leases with cheap optionality.

    At the current strip, and with a carbon copy of 2014 capex, 2015 debt to EBITDA metric would have ballooned. Move makes sense to us and minimal drop in guidance vs current Street speaks to improving wells in the 2 real core plays.

    More color over at http://bit.ly/pqYr1I
    Nov 11, 2014. 12:17 PM | Likes Like |Link to Comment
  • Parsley Energy ---- Addressing Inventory Concerns [View article]
    Thanks.

    The weekly wrap:
    http://bit.ly/1n9axSZ
    Aug 30, 2014. 10:45 AM | Likes Like |Link to Comment
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