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Zegnus Deuce

 
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  • Too Many Questions Remain To Buy Hugoton Royalty Trust [View article]
    Hello BermudaHigh,

    From my last post, "if you are bullish on natural gas and feel that natural gas prices will be $5 per Mcf or higher for years 2015-2022 then your PV would be $7.69 assuming HGT has NO obligation to pay any portion of the settlement." In this calculation, I ran the PV with natural gas prices at $5 for years 2015 - 2022. I also assumed NO settlement charge.

    If I was short HGT then this article would look different - starting with the headline and the analysis. I would also disclose my position. An article is more effective when the author is explaining why they have put their own capital to work. In the case of HGT, I wrote about why I did not like the investment. I research stocks and I like to share my opinion. I also enjoy the feedback.
    Oct 13 07:29 PM | 3 Likes Like |Link to Comment
  • Halcón Resources: Latest Eagle Ford Results [View article]
    Richard,

    Thank you for the update. I enjoy all of your articles. What kind of output makes an El Halcon well successful? What kind of costs do you see at the project level that make the single well not profitable assuming a 50% IRR and $100/Bbl wti?
    Thx, ZD
    Mar 28 11:09 AM | 2 Likes Like |Link to Comment
  • Too Many Questions Remain To Buy Hugoton Royalty Trust [View article]
    Hello BermudaHigh,

    Thank you for the comment. The point of this article is NOT to short HGT but to be aware of the issues HGT is facing. HGT is a terrible short. Look at my PV's and where it is currently trading. There is not a huge amount of downside. Furthermore, there are only 40m units outstanding and I would not want to short an asset that has a monthly distribution.

    My model reflects the amount HGT has spent for the partial settlement payment but the arbitration is for approximately $28.5m. I doubt the trustee will forfeit the money that has been paid towards the settlement if the arbitrator determines HGT should NOT be obligated to pay the $28.5m.

    If you are bullish on natural gas and feel that natural gas prices will be $5 per Mcf or higher for years 2015-2022 then your PV would be $7.69 assuming HGT has NO obligation to pay any portion of the settlement. I do not think natural gas prices will be that high which is why I used the Henry Hub strip for the majority of the scenarios. I also think HGT will have to pay some portion of the settlement.
    Oct 13 06:33 PM | 2 Likes Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    Hello Factzplz,
    Thank you for your comment. I appreciate you pointing out what was missing from the article. You made some great points. In the future I will add more sections to fill in the background. Your feedback is welcomed and appreciated.

    I did not consider the target levels to be important considering CHKR did not state them in their last 10k but they did state the incentive and subordinate thresholds.

    CHKR's pre-filing documents lists the subordinate, target and incentive distribution on p. 54. The targets where based on price levels starting at approx 4.00 in Q1 2012 and rising to 5.00 $/mmbtu in Q2 2014. They missed their levels in 2012. They could knock it "out of the park" for the remaining life of the trust but by looking at the average production curve of a horizontal well in the Granite Trust I don't think there production will be timed high gas rates. I would rather own the company that has the drilling and servicing contract, and that gets half of the revenue from the 118 Development Wells. The unit trust has a finite life and limited resources.

    I do not think the revenue levels will be high enough during the life of the trust to justify what it is trading at today. There are plenty of people who own it and believe it is worth their capital. Best of luck to them.
    Sep 25 01:16 AM | 1 Like Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    Thank you, Gigem for the comment. I agree with the bullish case for Nat Gas but I don't think CHKR is the way to capture it. CHKR's pre-filing documents lists the subordinate, target and incentive distribution on p. 54. The targets where based on price levels starting at approx 4.00 in Q1 2012 and rising to 5.00 $/mmbtu in Q2 2014. You are right that wells can be reworked but I think there are better opportunities in the current market then CHKR like the E&Ps, pipelines, and service companies without taking the risk of the how much product can be produced when the well is reworked. If I had to chose between CHK and CHKR then I would take CHK because it has the drilling contract and 50% of the revenues from the 118 Developmental Wells. I'd rather own CHK because I am more comfortable with their future prospects then with what CHKR can do with the resources available to it. BTW, I do not have a position in CHK.
    Sep 25 12:22 AM | 1 Like Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    I appreciate your comment. I see CHKR as an asset that will produce the majority of its product at lower values and its production yields will not be significant enough to get a full repayment of capital. You disagree and that is why we have a market. The horizontal well graph tells the story for me. I have no clue where the Nat Gas price is going to be in 2017 but I don't think CHKRs production will be high enough to take advantage of the higher values. There are other ways take advantage of Nat Gas (i.e. pipelines and E&Ps). I like pipelines and E&Ps and would rather own them then take on the risk of timing when to sell the unit trust shares. If you are long CHKR then best of luck.I do not have a position nor do I plan to take one. Thank you for your time and feedback.
    Sep 24 11:42 PM | 1 Like Like |Link to Comment
  • Halcón Resources: Latest Eagle Ford Results [View article]
    Thanks, Richard. Your input is much appreciated.
    Mar 28 06:37 PM | Likes Like |Link to Comment
  • San Juan Basin Royalty Trust: Distributions About To Pop [View article]
    Good article. Well done.
    Feb 20 08:52 PM | Likes Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    Hello Seek, CHKR shares will NOT be converted to CHK shares after Q2 of 2017. The subordinate threshold expires after Q2 2017. At the end of Q2 2017 the subordinate units, which are owned by CHK, will be converted to CHKR common units.
    Oct 23 08:45 AM | Likes Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    Hello Brian, It looks like you have it covered.
    Oct 18 01:42 AM | Likes Like |Link to Comment
  • 5 Oversold Stocks With High Institutional Ownership [View article]
    Thanks for the comment. I agree with you that more work is needed after identifying the oversold stocks. As stated, I do not have any positions in the stocks listed but this screening strategy is one way I like to start a "watch list." BTW, I am jealous of your work environment. I have never made it to Lisbon but am planning on making a trip to Portugal sooner rather then later.
    Sep 28 09:23 PM | Likes Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    Hello RPapirner,
    Thank you for your question. I am staying away from the royalty trusts. If you are looking for income then look to midstream MLPs.
    Sep 25 12:27 AM | Likes Like |Link to Comment
  • Don't Buy Chesapeake Granite Wash Trust At $20 [View article]
    No aschroed, I am not short.
    Sep 25 12:24 AM | Likes Like |Link to Comment
COMMENTS STATS
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