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  • Eureka Hunter Sale May Push Liquidity Concerns To 2017, But Magnum Hunter Remains Burdened By Fixed Payments [View article]
    Growing pipelines with major increases in areas without takeaway are ideal candidates for MLPs looking for growth. Premiums will be paid for these assets.
    Jun 28, 2015. 01:31 PM | 1 Like Like |Link to Comment
  • Eureka Hunter Sale May Push Liquidity Concerns To 2017, But Magnum Hunter Remains Burdened By Fixed Payments [View article]
    I was suggesting that since eureka was designed to capture MHR's well production it's likely any acreage included in the JVs will be close and most likely tied into eureka.
    Jun 28, 2015. 01:27 PM | 2 Likes Like |Link to Comment
  • Eureka Hunter Sale May Push Liquidity Concerns To 2017, But Magnum Hunter Remains Burdened By Fixed Payments [View article]
    Just to point out a few obvious reasons Eureka could be sold for a premium:
    -MHR is currently negotiating a +~$450 Million JV which should consist of roughly 50 Utica wells. Eureka's growth has been designed to capture MHR's production so in addition to a newly announced long term contract for eureka the JV wells will likely be plugged into the pipe as well.
    - pipeline mlp's are scouring all shale plays for growth given the recent decline in rig counts, so it's no surprise eureka with its rapid growth and located in the lowest finding cost shale play would be seen as very attractive.
    I'd also like to point out:
    - suggesting that a 25% premium over an outdated valuation seems optimistic is nothing more than peanut gallery drivel.
    - maybe you should consider changing your profile picture to a gold fish because GE's record over the long term has only been wins so far. The big picture is more important than a couple minor missteps along the way.
    Jun 28, 2015. 12:32 PM | 4 Likes Like |Link to Comment
  • Will Magnum Hunter Finally Make A Big Deal? [View article]
    I'm big time long MHR.
    Jun 27, 2015. 03:28 AM | Likes Like |Link to Comment
  • Will Magnum Hunter Finally Make A Big Deal? [View article]
    Mike - I think your assessment is conservative, I think it's too conservative. I think GE pays down the revolver and waits to complete the 2 JVs properly and as quickly as can be accomplished. I would then assume he would begin taking bids for all the wells included in the JVs and the already partially completed wells owned by MHR including the Farley etc...described as "low lying fruit" . If the JVs total $600 Million, GE will have some real bargaining power and why not use those economies of scale for their own semi completed wells. Production increases, in a low priced NG environment but those wells will be waiting when Natural gas prices increase and he can then hedge good pricing. I would assume the company remains in a holding type pattern as far as new production is concerned but infrastructure can be built and sites identified for better days. Financially the company will be revived and poised to grow. In November maybe the one of the Preferreds are retired but I think GE is tired of walking the tightrope and I'd expect him to keep a cash pile ready and visible on the balance sheet. Liquidity is a big issue and I think Gary's done watching the equity price become destroyed by his cavalier spending habit. Nobody saw the crash coming and I think a prudent path forward is going to be demonstrated. The assets are ready, we just need natural gas to come back up and the Marcellus/Utica infrastructure to be built out. It's a new day for MHR and the pipeline sale if it fetches $700 million will be an absolute game changer. Share pricing will never be near $2 again. Cheers and this is great. I'm long MHR and these are my opinions. Gary's the man, get ready people.
    Jun 27, 2015. 03:25 AM | 2 Likes Like |Link to Comment
  • Trinity Industries Shows Value Despite The Noise [View article]
    This case is a symptom of the disease in this country. Every week another article comes out about the "inequality" and "unfair distribution of wealth" in this country. Every single one of those articles is jealousy and resentment dressed in the words "unfair". They point to statistics of the "imbalance" of wealth and conclude it's somehow unfair. To say that someone who has success leading & growing their personal or public business is somehow responsible for the success and wealth of someone that chose a regular job is inaccurate. The successful people become more successful and this idea is what our country was founded on... Harmen sued his competitors for profit, not because he cares about the people that were involved in tragic car accidents and Bloomberg should hold it's pen until it's able to confirm the facts. Save the rumors for the tabloids, not business/financial news, Bloomberg. It's just as easy to speculate and quite honestly more logical to believe that Harmen sent out a crew to alter parts of various guardrails to give his case substance. Who stands to make more, Harmen or TRN? Why would TRN jeopardize it's enterprise for a few extra hundred thousand dollars? The guardrails passed their safety tests before installation and they passed again during the recent study. Driving is inherently dangerous and there are too many variables to be able to prevent every possible harmful scenario to all drivers when accidents occur. Harmen is exploiting the misfortunes of family deaths/injuries due to car accidents, not guardrails, for his own profit. It's sad that so many people are willing jump on the "unfair" bandwagon and I wish we would start writing more articles about what obvious prejudices society has created towards success.
    Apr 25, 2015. 08:35 PM | 6 Likes Like |Link to Comment
  • Magnum Hunter's Shrinking Asset Base And The Implications For Shareholders [View article]
    Jason, I loved your article as it highlighted all of the ways MHR can raise cash and assures long investors. Let me start by discussing a few incorrect statements you made.
    First, to say that the Bakken is going to become a ghost town is completely laughable. MHR may not get $300 Million from the sale but it wouldn't surprise me if they picked up $200 Million at $70 or $75 oil which could happen within the next 12 months. Selling the Bakken will be helpful but it's not the most important objective in the waterfall of priorities.
    Second, when discussing Eureka Hunter capital expenditures, it's inaccurate to suggest MHR will be spending $100 Million in 2015. Eureka Hunter has it's own line of credit which basically eliminates the need for the current investors (Morgan Stanley Infrastructure and MHR) to have to kick in additional capital. With each increase in throughput the line of credit likely grows as a function of the entities EBITDA. Even if it doesn't, which I find unlikely MHR can sit back and not contribute anything and their share of the line will diminish proportionately. So MHR doesn't have to kick in any money if the prudent decision is to spend elsewhere or not spend at all.
    Third and probably most importantly, you keep saying MHR is selling off the Utica in the discussed $500 Million JV. MHR is not selling off the Utica. The JV will be a split of profits and described above by JMS54. At some point the well ownership will return to MHR. What you don't seem to understand is the JV allows MHR to continue proving up their acreage and increasing volume throughput on Eureka with "OPM" Other People's Money. The acreage become more valuable by becoming proven, MHR makes money, the partner makes money, Eureka makes money and it buys MHR TIME. MHR has 464 Utica locations and 387 Marcellus locations throughout their 128,000 Acres and 80,000 Acres respectively. If the JV is for $500 Million and well costs come down 40% to $5 Million that would mean the JV could drill around 100 locations. That leaves 364 Utica locations to go while MHR spends nothing and proves up the acreage.

    Why does MHR want to buy time? You might not follow the progression of development of LNG export facilities but you probably should look into it. You also should take a look at natural gas demand growth through 2018. It is estimated that natural gas demand will grow by 18Bcf/d by the end of 2018 with LNG exports and power generation comprising 12 Bcf/d of the increase. To put 18 Bcf/d into perspective, it would exceed the entire current shale production from the Marcellus/Utica area by 3Bcf/d. In addition, the fall in US rig counts by 50% today will only bridge the gap more assuredly while the LNG export facilities continue to be built at a frantic pace with major bonus awards for early completion. It is estimated that should the increase in demand hit 18Bcf/d by the end of 2018, barring any miracle drilling solution or generators that can run on trash like Doc's dolorian, the price of Natural Gas is going to move towards $5/mmBtu.
    If MHR is still solvent by then, their acreage will be worth 2 to 3 times what Gary has paid for it and the revenues and net income will be magnified multiple times what they are today as well. The company will be worth $15 to $20 and you will think back to the day you read this and say I wish I could have understood Gary's strategy better. To you it's a tight rope but that's because you don't see what Gary sees and you don't talk to who Gary talks to.
    Mar 27, 2015. 10:58 PM | 4 Likes Like |Link to Comment
  • Trinity Industries - A Cyclical Stock With 30% Upside Potential [View article]
    If you were a large fund manager and your portfolio was up big for the year and you started watching oil fall,... it is highly likely you would sell everything related to oil until you had more clarity. Falling prices doesn't always mean trouble with the company or the industry it could be larger firms thinking they could repurchase the same stocks for 30% less in 3 or 4 months. I couldn't agree more that the price of oil doesn't affect rail cars and completed pipelines profits because the wells that have been drilled aren't going to be shut off, when they go on they stay on. The Bakken is currently producing more oil than it has ever produced and the drilling for more oil will continue until the price drops below a level of profitability that is unacceptable to producers. I've heard this level for the Bakken is around $70 per barrel give or take $3 or $4 depending on where you are in the play. It could be lower and probably is for some of the more efficient firms and in the most viable areas. The highly leveraged firms will be the first to shut off new drilling and they will likely be purchased by the larger firms with better balance sheets. The firms strong enough to hold their positions and keep drilling will reap the benefits of lowers costs due to demand falling for important materials and labor as the leveraged firms step back or get purchased/go bankrupt. This will drive that $70 dollar per barrel number lower and drilling will continue. You also have to include the fact that most of these firms are hedged through 2015, falling oil prices is the reason they hedge their production. Oil will have to fall much further and stay there for 6 months or longer for there to be a real slow down in new drilling. The wells that have been drilled will continue to flow and that oil/gas will be moved out by railcars so the demand will continue for transportation of these commodities. One additional bonus to falling oil prices is that it is prohibitive to new pipelines as the cost of new pipelines are much more expensive and need longer term commitments from producers when compared to rail transportation. Trinity is going to continue to make record profits for the next several years and in my opinion it is an obvious buy at these levels. The lawsuit could hurt the company but it's strong enough to payout even the worst case scenario. There are multiple ways Trinity could raise additional capital if it needed it which it probably won't even have to do. $7.1 Billion of orders not including today's roughly 9,000 car new order. Trinity has a contract to sell $1Billion dollars worth of cars in it's lease fleet in 2015. The company isn't going anywhere and soon the big funds will step back in and repurchase the shares they sold at the highs and it's going to right back up as it should. $4.10 earnings per share and a price of $34.90....It's only a matter of time.
    Nov 4, 2014. 08:35 PM | 3 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    The bulk of the the long term debt +- $500 Million has a high prepayment penalty (yield or deferred maintenance formula) until May of 2016, the way things are going rates will still be very reasonable 16 months from now.
    Nov 2, 2014. 12:18 AM | 2 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    1st Gary is selling the Bakken Assets for the same reason he sold the Eagle Ford Assets, rate of return and EUR. Gary believes the Marcellus/Utica is more profitable with up to 3 times the ultimate EURs, when drilled on pad sites in areas where the two shale plays stack. Its a simple decision to stream line the focus of the company into the most profitable play. The Australia purchase is out and he is no longer pursuing that opportunity. The "Monster" wells are becoming common and soon people will not call the "Monsters" they will just be more of the same...HUGE UTICA WELLS. Further when I referred to "too much money to be made" I was referring to the midstream companies that will be throwing capital at projects to bring Utica and Marcellus gas out to bigger trunk lines. With oil declining their will be an even greater focus on gas pipelines. It is also true that when MSI bought ArchLight the preferred shares Arclight had were converted to common, which instantly increased MHRs income by $16 Million. Utica wells are around $9-$10 Million to complete and when the pipeline is IPOd and MHR has control through the GP, they will be able to continue to bring the Eureka Line right to their wells without having to fund the project by themselves. Eureka's borrowing base will grow with its net income and even if MHR has to kick in extra, MSI has agreed that MHR can either lose share in the pipeline or pay within 180 days. They will be focused without the Bakken and they will have a strong liquidity ($212 Million + $225-$325 Million + $65 Million + $200-$300 Million from the IPO + various other asset sales)...for arguments sake on the low end that's around $700 Million. They will be able to eliminate some preferred shares and drill around 20 Utica Wells & 30 Marcellus wells. Stack those wells on 32,500 BOE/D and we aren't talking about MHRs light back pocket anymore...Gary knows what he's doing, he's a gun slinger and that makes people nervous but he's a very smart CEO and I have no doubt the company gets sold for more than 3 times where the price sits today. Gary is less concerned with the debt because he is building this company to sell, don't forget that.
    Nov 1, 2014. 02:02 PM | 2 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    I would also direct you to the CNX Q3 2014 Energy Earnings Conference Call Webcast/slides, ( Please refer to slide 19, Average EUR/Well in Marcellus shale has been increased from 7.1Bcfe in 2013 to 14.1Bcfe in 2014. If the increase is even halfway justified Marcellus is way better than you are concluding. Granted they do have longer laterals/more frac stages, but no reason any of the other companies can't replicate the process. The Utica slowly leaving the embryonic stage as pipelines make their way across the counties of Noble, Monroe, Marshal, Wetzel, Tyler and Washington. Monster wells are becoming regular occurrences and for a company like MHR that just had 13-14kboe/d ending 2013 these wells will be game changers even at current differentials. That gas is a gold mine and they'll get it out,... too much money to be made. MHR has enough resources to sustain the wait while putting on new wells, while midstream companies build trunk lines into the area and others like Cheniere start shipping it to Asia all while we shut down coal powered plants and move to natural gas energy plants.
    Nov 1, 2014. 12:06 AM | 4 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    My final comment to your article....Do you think that maybe, just maybe, Gary Evans had enough sense to sell the last and biggest piece of their Bakken in a way such that it wouldn't close till 2015....2015 so that MHR could defer the capital gains taxes for another 15 or 16 month? I don't know maybe use the taxable cash to drill about 5 more Utica Wells before paying Uncle Sam. Just a thought...
    Nov 1, 2014. 12:06 AM | 3 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    Two slight corrections to my response.
    They announced $212 Million in Current Liquidity and two, the Stewart Winland Utica well was actually 46.5 Million Cubic Ft of gas/Day. One more thing, They have 3 Stalder Utica wells (50% owned) and 3 Ormet Utica wells (100% owned) due for completion by EOY. Get ready and cover your short.
    Oct 31, 2014. 06:35 PM | 3 Likes Like |Link to Comment
  • Magnum Hunter Resources: Vulnerable In The Face Of Lower Oil Prices [View article]
    Zoltan Ban - You're article is very uniformed and it appears you are writing this article without doing any actual research into MHR and the company's plan moving forward.
    1st, your article states that if they keep drilling in the Bakken...This is wrong. When they renegotiated their credit facility, they announced that they have have $220,000,000 of liquidity as of their renewal and they plan to use it do develop their Marcellus/Utica Acreage so they are done drilling in the Bakken. Further, they have been selling their Bakken Acreage in 3 stages, two are complete and the 3rd is anticipated to happen in early 2015. Just like when they sold the 2nd piece, they did not disclose the deal until it was about to close, so it is probable and possible that they have already lined up a buyer and signed a contract to close on the Samson operated piece $225 to $325 Million dollars. They decided to leave the Bakken six months ago or longer...this is not new information.
    2nd Have you not even read about the Eureka Hunter Pipeline? In case you haven't let me inform you of this asset. It was purchased with a company out of bankruptcy called Triad. MHR put a substantial amount of capital into the line to begin growing the line and its volumes. ArcLight Capital came in as a minority partner not long after they began getting the line into shape. They purchased 42% of the line and MHR was able to monetize a large portion of the capital they put into the line and some. A few months ago ArcLight sold their portion of the line to Morgan Stanley Infrastructure (MSI). Then MSI signed a contract to purchas an additional 6% of the line from MHR for $65 Million which will close in early 2015. This puts the value of the line according to MSI at $1Billion. MHR and MSI plan to maintain control of the General Partner of Eureka MLP and IPO a large portion of the entity in 2015. The pipeline is growing exponentially and both MHR and MSI will recoup a large sum of money when the line is taken public. If it's anything like when WNR took their pipeline public as WNRL, I suspect both MSI and MHR will be able to pocket a large portion of their capital spent and maintain a sizeable ownership piece not including the fact that they will control the General Partner. If MHR was to fire sale their ownership of the line, they could raise close to $400 Million or more I suspect.
    3rd - Have you been following the results from their Utica Wells? They have announced 3 Utica wells to date. The first the Farley, the well blew out because of the high pressure before they could finish the frack stages and they were barely able to save it from being completely lost. Then they brought in a bunch of gulf coast engineers and retooled their operation with extremely high pressure casings that could handle the intense pressure gas that they were encountering. The second Utica well was the Stalder, 32.5 Million Cubic Ft of Gas/Day, a record at the time and the biggest in the play until Rice Energy hit a larger well. MHR's 3rd Utica well was the Stewart Winland, 45.6 Million Cubic Ft of Gas/Day, the new record and one of the largest wells in the country by measure of BOE/D. The Stewart Winland Utica could heat 241,000 homes per day. It was truly a monster. Then they announced the 3 Stewart Winland Marcellus wells, all of which were right around 17 Million Cubic Ft of Gas/Day and these wells aren't just dry gas they come with the liquids which MHR can process and gets up to $1.00 in uplift per MMBTU.
    So in conclusion, MHR is a gas company, they just renegotiated their revolver and have $214 Million in available liquidity and its about to be extremely well capitalized after they announce the sale of the Samson Operated Bakken Land ($225-$325 Million), complete the 6% sale of Eureka ($65 Million), then IPO the pipeline (its speculation but its absolutely possible MHR recoups $300 Million while retaining a large portion of ownership of the MLP and its General Partner.) The MHR short play is over, its time to get long and watch Gary Evans show you that their acreage in the Marcellus Utica regions is best in breed and the further south they go the bigger the wells they will find do to increased depth and pressure. I suspect they are going to hit their EOY production of 32,500 BOE/D and probably crush that number. Gary stated almost a year ago "When companies start hitting 40-50 Million cubic ft of gas per day wells, people are going to start taking note." I agree with him and it's happening.
    Oct 31, 2014. 04:17 PM | 4 Likes Like |Link to Comment
  • $5T Permian Basin boom threatened by falling crude prices [View news story]
    PXD CEO says they can still make money at $50-$60 oil.
    Oct 26, 2013. 12:20 PM | 2 Likes Like |Link to Comment