Seeking Alpha

William M. Wright

 
View as an RSS Feed
View William M. Wright's Comments BY TICKER:
Latest  |  Highest rated
  • Offshore drillers whacked at Deutsche Bank, several names cut to Sell [View news story]
    Analyst are reporters. They tend to be better at reporting what has happen and outlining known trends in place then predicting turning points or future stock prices. The trend towards expanding on-shore drilling and recover technics using new horizontal drilling/fracking in USA's shale fields has now been in place for nearly a decade. And the notion that onshore fracking is more environmentally dangerous than drilling in mile+ deep-water is nonsense. One need only review the history of offshore drilling (and oil spills) environmental disasters to know that fact. Of course offshore drilling in deep-water will continue to expand but at a slower near-term rate amidst greater competition pricing pressures from many new rigs and companies like ESV and SDRL who just entered the deep-water drilling business over the last decade. The biggest boom in offshore drilling and rig pricing appears to have peaked around 2007/08. At the same time over the last decade there has been an expansion in the delivery of more modern deep-water drilling rigs. One need only look at the stock price trends of DO and RIG vs. ESV and SDRL to know whose stock prices benefited from having a younger more modern deep-water drilling fleet since 2007.

    Bottom-line one can rationalize their favorite offshore-drillers strengths. But in the short-run these stocks are highly correlated and move in tandem. I'm glad I sold all my RIG, ESV and SDRL shares in July after buying in March and April (thinking that was the near term bottom). If all the deep-water drillers have declined since last November 2013 in a booming stock market I'm now in no hurry to buy them back in todays weak market given todays increased risk of a market pull-back or correction now in place.
    Aug 4 12:01 PM | 1 Like Like |Link to Comment
  • Update: Seadrill Outstanding Shares Up 5% Post Bond Conversion [View article]
    Expanding middle-east conflicts no long push up offshore drillers prices like the 2005-2008 days. Another poor day for Offshore drillers. Are they going back to their March-April lows or will they hold a little above those lows? Will I get to buy back SDRL shares at $33 again or is $35 a new short-term floor?
    Jul 28 12:38 PM | 3 Likes Like |Link to Comment
  • Transocean: The Street Does Not Understand This Company [View article]
    "So, what's keeping the lid on the price of the shares and what amount of idle and stacked rigs would justify the current market price?"

    "The industry is experiencing a cyclical downturn due to a hefty amount of new supply. Rigzone shows that the number of active rigs today equals the number a year ago, however the utilization has dropped from 87% to 80% due to 67 new rigs entering supply. Obviously, this supply has affected Transocean's ability to renew contracts and the number of stacked rigs and those held for sale has increased substantially"

    Excellent value analysis with the addition of your most important points you make above which individual stock value investors on RIG (and every other offshore driller) usually always ignore.
    Jul 25 10:28 PM | Likes Like |Link to Comment
  • Update: Seadrill Bond Conversion A Done Deal; Little Guys Might Not Benefit [View article]
    Thanks DividendInvestorLA....... been familiar with offshore drilling since the 1970's. So your first four points, I'm well aware of. I've seen no research showing the rate of offshore drilling growth and pricing is rising above the 2007-08 peak-levels. If you have any please post it. The stock prices of old-line deep-water drillers reflects my point about rising onshore and slowing offshore drilling growth rates. Recall many individual RIG investors in 2007 so certain RIG stock was going to over $750 they refused to sell in 2008. Fortunately for me I was NOT that certain and had no problem selling in 2008. Just as a point of reference, I've traded in and around RIG, ESV and SDRL several times. So I'm not married to anyone of these offshore drillers. The most recent was loading up on SDRL @ $33 and selling @ $40 into Junes market strength (and after collecting that fat dividend). I've never purchased DO. Nor would I purchase DO simply because it's the least leveraged.

    Your point #4 is what relates directly to my question. I was hoping to expand the discussion in that area. However your statement, "Generally, if you think SDRL is "overleveraged", what are you doing even considering buying the stock. I wouldn't if I thought that. I think it is using leverage very astutely"....makes no sense to a guy with a finance degree like me. I said, "SDRL is the most leveraged" is that not a fact?

    My question was, "So is SDRL now in a unique case where overleveraging on new equipment makes SDRL the winner of new contracts in a weak near-term offshore drilling market? Or as others argue DO is the least leveraged and therefore financially better positioned to weather near-term weakness?"

    Perhaps your interpreting my use of the word "Overleveraging" to mean it must be negative or bad. Not so. Said another way SDRL is more leveraged than every other driller. That's a fact but I don't mean it to be an absolute bad fact. In Finance Leverage can be good or bad (just like with a margin account) depending upon the outcome. Certainly if it helps you win new contracts that's a positive. And as I said I've never purchased DO just because it's the least leverage. So it sounds like we're in agreement on SDRL. Its leverage of newer equipment rigs maybe just the reason it's stock hasn't fallen back to 2008 levels while DO's lack of leveraging on new equipment is why it's stock price is about 1/3 where it was in 2008. I'm just looking for as many views on my question above to hear what others feel. Thanks again for commenting.
    Jul 25 10:05 PM | 1 Like Like |Link to Comment
  • Update: Seadrill Bond Conversion A Done Deal; Little Guys Might Not Benefit [View article]
    "And it is worth noting that our renewal energy President recently indicated drilling could occur off of the Atlantic Coast" .....Only time I heard that was prior to the BP/RIG offshore tragedy. If the President isn't going to indorse a safe (much safer than thousands of miles of old pipelines) new XL-Pipeline to please his environmental supporters there is no way he'll now endorse offshore Atlantic drilling. Even the success of onshore fracking drilling is always under banning pressures in big democratic states like New York and California. Which brings up the 6,000 pound elephant in the room. How will the rise in onshore drilling and slowing of new offshore drilling and expanded capacity on new builds (which started back around 2007-08) impact the near term outlook for all these offshore drillers e.g. SDRL, DO, RIG, ESV, NE. Their charts look similar, all below their Nov 2013 levels. The only good near term thing I see is they all look like they hit bottom in the first half of 2014. We know SDRL is the most leveraged with one of the most modern fleets. So is SDRL now in a unique case where overleveraging on new equipment makes SDRL the winner of new contracts in a weak near-term offshore drilling market? Or as others argue DO is the least leveraged and therefore financially better positioned to weather near-term weakness?
    Jul 25 08:39 PM | Likes Like |Link to Comment
  • Key Factors That Will Cause SolarCity Earnings To Disappoint [View article]
    Good points, although a strong overall market may help keep SCTY in the $70s+ in the Short-Run even if you're right in the Long-Run. Anyone with views of FSLR at under $65 today vs SCTY current value? Anyone with views on Trina Solar (NYSE:TSL) current value vs upcoming quarter?
    Jul 25 07:43 PM | Likes Like |Link to Comment
  • Market Notes: A Note On Ackman's Herbalife Fiasco -- July 22 [View instapost]
    Bill Ackman's short bet turned into an obsession somewhere along the line. No where in the history of short-selling has any billionaire been so obsessed with his position that they spend $30 million on follow-up research to rationalize the logic of their multi-million dollar losing short-position bet....Claiming their MLM is an illegal pyramid scheme is an act of desperation in hopes of sparking a government investigation.

    Ackman's relatively young but surely he knows AMWAY (started in 60's), Herbalife (started in 1980) and Nu Skin (started in 1984) are the granddaddies of MLM. They've been under State and Federal scrutiny for years, even decades, with many regulators questioning and disgruntle distributors making similar claims. Grandfather always used and endorsed Herbalife as beneficial to his arthritis. Unlike grandfather I've been trained to take expensive medication and get multi-thousand dollar knee replacement operations for my arthritis. Nu Skin is as you say.....and they openly admit their products are more expensive than Procter and Gamble because they include more superior natural ingredients. Their original target market was the aging baby bombers who were willing to pay more to get more. Yes all these MLMs seek to get you to buy boxes of products to sell upfront. So? Trying buying a McDonald franchise with no money down. And yes like a lot of things 20% make 80%. Hey, that sounds like USA CEO's pay vs their worker bees. Expensive products? Perhaps. But try buying any seniors monthly supply of American Pharmaceutical medication and tell me that's not outrageously expensive relative to the rest of the world.

    Ackman needs to consult a professional about his Herbalife Obsessive Compulsive Disorder.
    Jul 25 06:56 PM | Likes Like |Link to Comment
  • Go Economy Go! [View article]
    Hard for us old-timers to believe the "new normal" fed thought process is seeking to generate 2% inflation for USA consumers in a "new normal" Global Economy that's full of excess labor capacity. So while the "new normal" fed policy expands the wealth inequality gap those six figure taxpayer paid economics scratch their heads wondering why wage USA wage growth for the peasants isn't rising faster than the inflation their policies add to the peasants expenses. Meanwhile USA Multi-nationals continue to enjoy the benefits of shifting expenses and taxes to lower cost countries as they please while capitalizing on the lowest interest rates in USA history and counting on the USA government to keep USA consumers spending and indebt to fuel their profits. Yep, that's the "New Normal".
    Jul 25 06:04 PM | Likes Like |Link to Comment
  • Inter Pipeline: This Dividend Growth Company Is On A Tear And It's Not Over Yet [View article]
    Great in-depth article. Especially appreciate the research that: "Inter Pipeline converted to a dividend paying corporation in September of last year. As a result, the company's monthly dividends are not subjected to the 15% Canadian foreign tax if US investors hold the stock in a qualified retirement account."
    Jul 25 05:09 PM | 4 Likes Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    So now 244 is a mind ready too. His position can't possible make him biased. Nope he knows I'm biased. How? Because I posted new information "word-for-word" from ROYT management Press Release sent to me this morning and also post an "excerpt" from that press release relating to 244's wishful "NEW Drilling Permits" interpretation and toll him to read managements/lawyers words carefully about the "drilling permits" possible impact on ROYT. So it's clear anyone who's not willing to accept his wishful investment thinking and legal experience as the final word must be biased. Because 244 can't be biased. So here come the conspiracy theories. It's clear your position has closed your mind and made you paranoid. No doubt now you'll claim I'm short ROYT. Waste of time talking with Seeking Alpha Avatars. (Especially the newbie one who's investment experience and brilliance is a number with no investment background and whose resume list themselves as "broken-down old carpenter" ) P.S. Full disclosure: I took a sizeable position in ROYT @ $10.50-$10.75 for a couple of clients and myself. So if I'm biased it's only based upon how I trust my experience vs. yours.... But NO WORRIES 244, I wish you the best, I'm through sharing my information and thoughts on this tread of Avatars.
    Jul 25 03:39 PM | Likes Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    244 Your telling us nothing new. I laid out both sides of the ROYT argument from managements lawyers view (not mine). Your presumption now is management has to exaggerate the worst case outcome and that it can't possibly happen is no doubt based upon your large position. Wishful thinking. Management has a fiduciary responsibility to tell the truth as best they can from the current information available about the impact of this proposed law on ROYT.

    FYI several Law Firms are already seeking to represent large shareholders in possible lawsuits that were announced back on June 8th e.g. "Glancy Binkow & Goldberg LLP announces that it is investigating potential claims on behalf of investors of Pacific Coast Oil Trust concerning possible violations of federal securities laws. Please contact us at 201-9150" ...."Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential securities fraud at Pacific Coast Oil Trust. A complaint has been filed in the Superior Court of California, County of Los Angeles on behalf of all persons who purchased or otherwise acquired Pacific Coast securities pursuant or traceable to the registration statements that became effective on May 2, 2012" This likely sparked the excessive selling over the last few weeks and then the stop loss orders kicked in on those two massive down days.

    Yesterdays $9.61 price and todays positive action looks like the end of panicky selling for now. No need to let anyone's cautious views stop you from doubling your bet right now based upon your knowledge of the outcome (as you see it).
    Jul 25 12:46 PM | 1 Like Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    This was just published this morning by ROYT's management. Seems clear they don't share your legal interpretation of this ballot issue proposal. I understand from your post you hold a large position. You may be right, you maybe wrong. Either way litigation is expensive and time consuming and would likely distract large institutional investors from returning to help drive up prices until it's clear to all this isn't going to pass or will have little impact on ROYT. The authors comments about using options is a wise one. Naturally inside retirement accounts that can't be done. Those inside/managing retirement accounts who were bold enough to gamble at $9.61-10.05 will have a jumbo winner in todays zero interest rate if this proposal is defeated or if it's clear it has little impact on ROYT future dividends.

    ROYT Management's Own 7/25/14 Words: Update regarding Santa Barbara Ballot Initiative:

    As previously discussed in the Trust’s Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 9, 2014 and in the "Recent Developments" section of the Trust’s Definitive Prospectus Supplement filed with the SEC on June 11, 2014 and elsewhere, an environmental group gathered signatures in order to place on the November 4, 2014 ballot in Santa Barbara County a measure (now called "Measure P") which would prohibit the County of Santa Barbara from issuing certain new permits for virtually all oil and gas production techniques currently in use in Santa Barbara County, including cyclic steaming. Because PCEC’s ongoing oil and gas operations regularly require permits in order to maintain existing production, the measure, if passed in November and not invalidated by the courts, would have material negative impacts on PCEC's Santa Barbara production. Approximately 70-80% of the distributions paid by the Trust over the past 3 months have come from Santa Barbara County production and thus if Measure P were to be ultimately approved by the voters, survive legal challenge and be enforced, it would have a meaningful negative impact on the Trust.
    Jul 25 10:03 AM | 3 Likes Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    Just Published by ROYT management. Read managements own words on this proposal update and "drilling permits" carefully:

    Pacific Coast Oil Trust Announces August Cash Distribution and Update Regarding Santa Barbara Ballot Initiative
    4:42 PM ET, 07/24/2014 - Business Wire

    AUSTIN, Texas--(BUSINESS WIRE)--Jul. 24, 2014-- PACIFIC COAST OIL TRUST (NYSE:ROYT) (the “Trust”) a perpetual royalty trust formed by Pacific Coast Energy Company LP (“PCEC” or “Pacific Coast Energy Company”), announced today a cash distribution to the holders of its units of beneficial interest of $0.13234 per unit, payable on August 14, 2014, to unitholders of record on August 6, 2014. The Trust’s distribution relates to net profits and overriding royalties generated during June 2014 as provided in the conveyance of net profits and overriding royalty interest.

    This month’s distribution of $5.1 million is 11% lower than the previous month ($0.13234 per unit vs. $0.14872 per unit) principally due to lower production from the Developed Properties as a result of one less day of production in June than May, higher capital expenditures from the Developed Properties, and higher lease operating expenses. Production from the Developed Properties was 105,730 Boe in June, as compared to 110,277 Boe in May. Average daily production from the Developed Properties was 3,524 Boe in June, as compared to 3,557 Boe in May.

    The current net profits amount from the Developed Properties was approximately $5.0 million. The current month’s lease operating expenses for the Developed Properties, including property taxes, were $3.5 million compared to $3.3 million in the prior month. The current month’s capital expenditures for the Developed Properties were $0.6 million compared to $0.3 million in the prior month. The current month’s distribution also includes $0.2 million for the 7.5% overriding royalty on the Remaining Properties which produced 26,542 Boe from 37 Orcutt Diatomite wells and five Orcutt Field wells. The cumulative deficit of the net profits interest on the Remaining Properties, including the 7.5% overriding royalty payments decreased by approximately $0.3 million in the current month and is now $2.3 million.

    Trust administrative expenses and the monthly operating and services fee payable to PCEC totaled approximately $0.1 million and were deducted in the calculation of the total distribution.

    Sales Volumes and Prices

    The following table displays PCEC’s underlying sales volumes and average prices for the month of June 2014.


    Underlying Properties
    Sales Volumes Average Price
    (Boe) (per Boe)

    Developed Properties (a) 105,730 $97.94
    Remaining Properties (b) 26,542 $98.12

    (a) Crude oil sales represented 97% of sales volumes.
    (b) Crude oil sales represented 100% of sales volumes.


    Update regarding Santa Barbara Ballot Initiative

    As previously discussed in the Trust’s Form 8-K filed with the Securities and Exchange Commission (“SEC”) on June 9, 2014 and in the "Recent Developments" section of the Trust’s Definitive Prospectus Supplement filed with the SEC on June 11, 2014 and elsewhere, an environmental group gathered signatures in order to place on the November 4, 2014 ballot in Santa Barbara County a measure (now called "Measure P") which would prohibit the County of Santa Barbara from issuing certain new permits for virtually all oil and gas production techniques currently in use in Santa Barbara County, including cyclic steaming. Because PCEC’s ongoing oil and gas operations regularly require permits in order to maintain existing production, the measure, if passed in November and not invalidated by the courts, would have material negative impacts on PCEC's Santa Barbara production. Approximately 70-80% of the distributions paid by the Trust over the past 3 months have come from Santa Barbara County production and thus if Measure P were to be ultimately approved by the voters, survive legal challenge and be enforced, it would have a meaningful negative impact on the Trust.

    However, this measure has not been passed nor has its legal validity been determined, and PCEC has provided the following update to the information previously provided to the Trust regarding this matter. As a result of the threat posed by Measure P to the entire oil and gas industry in Santa Barbara County, a broad coalition of Santa Barbara residents, businesses and groups has been formed to educate the public about this proposed measure. PCEC believes that the proposed measure would result in a major loss to Santa Barbara County jobs, tax revenues and the local economy. The coalition formed to oppose this measure, which PCEC considers to be flawed and costly, includes oil and gas companies and their employees, and teachers, farmers, businesses, firefighters, taxpayers’ groups, and many others. The coalition has formed a campaign committee to coordinate the efforts to defeat Measure P. Pacific Coast Energy Company has informed the Trust that it has taken a leadership role in helping to create this coalition and in working with this coalition to defeat Measure P, and that there will be a very fulsome and multi-faceted campaign to educate the voters of Santa Barbara County about the actual impacts of this measure.

    In the event that, despite the coalition's efforts, Measure P were to pass, PCEC believes that it will undoubtedly be subject to numerous legal challenges. PCEC has informed the Trustee that several prominent law firms have already issued letters to the County stating that Measure P has serious legal deficiencies including state law preemption, and that counsel have asserted that if Measure P is adopted, it would be a taking of mineral rights and other property interests and as a result the County will be subject to claims for compensation under the United States and California Constitutions. In addition, Measure P has certain exemptions for existing projects which PCEC believes may have applicability to PCEC’s Santa Barbara production.

    Pacific Coast Energy Company has informed the Trustee that it is committed to taking all reasonable steps to educate the voters of Santa Barbara County and to protect the interests of the many unitholders of Pacific Coast Oil Trust.
    Jul 25 09:36 AM | Likes Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    My exact words were, "If this passes most likely outcome is all NEW well drilling stops....."
    Jul 24 03:58 PM | Likes Like |Link to Comment
  • Pacific Coast Oil Trust Opportunity [View article]
    Continuously high oil prices and those advance shale oil drilling recover technics are the only reason for the new drilling boom in California. If this passes most likely outcome is all new well drilling stops in the restricted areas.
    Jul 24 10:40 AM | Likes Like |Link to Comment
COMMENTS STATS
218 Comments
347 Likes