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Festivus

Festivus
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  • Oil: Why Shale Drillers Can Burn Money At $100 Oil Yet Breakeven At $60 Oil [View article]
    While I agree with your overall thesis that producers carrying high debt-loads are in big trouble with lower prices I must question some of the math used to make this point. I haven't worked the Bakken but have worked a number of other unconventionals so would like to hear a Bakken person weigh in. Initial decline rates for these reservoirs are way higher than the 23% you mention - more like 70% + so if we take your 550 (assume that's MBOE EUR, no units given) well comes on at 2000 BOE/day by end of the first year it's only making 600 boe/day and so on. Maybe "base" decline rate slightly lower but if your entire production is made up of these type of wells base decline will be much higher than 23%. Also, there's no way this well would only make 50 MBOE in it's first year - the giant Bakken well mentioned in their statement IP-ed at 4300 BOE/day would make that in two weeks and will probably do 250,000 in the first year which is once again way more than 11% of their expected 700,000 BOE EUR. Another question about the decline rate: if growth (completing new wells?) slows why would your decline rate decrease ? Finally, when you say "maintenance", I think this is what most oil people would call finding costs. If you can consistently reduce well costs by 25% while high-grading your wells to achieve almost half again better EUR's (800 vs. 550 MBOE) then I want to hire you. But really I just can't make these numbers work.
    Aug 31, 2015. 01:12 PM | 2 Likes Like |Link to Comment
  • Seventy Seven Energy: Progress Toward Value Stalled [View article]
    Seems like the net result of the spinoff was CHK lost about $5/share which went into SSE initial price and then was quickly chopped down >80% as the market priced in the debt that had been off-loaded. I wasn't paying close attention - glad to here someone got out of this dog before it tanked.
    Apr 16, 2015. 04:57 PM | Likes Like |Link to Comment
  • McClendon financier settles lawsuit with Chesapeake Energy [View news story]
    Pocket change to these entities and 6000 acres out of 100K's -seems like yet another slap on the wrist for AKM
    Apr 14, 2015. 02:56 PM | 1 Like Like |Link to Comment
  • Seventy Seven Energy: Progress Toward Value Stalled [View article]
    This spin-off just a debt trash-can for CHK. Surprised this is even legal - you wouldn't IPO a company with 8X debt-to-equity and expect the market to bid favorably (or even at all). As a CHK shareholder who ended up with a bunch of SSE from this deal I would like to know if Icahn and the board members who approved this deal were forced to take SSE shares as well.
    Apr 14, 2015. 01:16 PM | 5 Likes Like |Link to Comment
  • Devon Can Grow With High Margin Production Strategy [View article]
    No and No. Still making plenty of gas much of which is coming from the Cana-Woodford that author mentions (notice the bo"e" volume number - that's because it's mostly gas).

    Market cap of DVN = $32B so Linn with market cap of $10B can't afford to buy half of DVN.

    This article is crap like most of the stuff lately on SA about this company.
    Jul 23, 2014. 09:51 AM | 2 Likes Like |Link to Comment
  • Don't Get Upset By The Price Drop In Chesapeake Energy Due To The Seventy Seven Energy Spin-Off [View article]
    Thanks for CBOE memo - Etrade didn't provide that. I have July $29 strike calls open that were converted to adjusted options. One thing the CBOE memo does not explain is the pricing of these - B/A is $2.05/$2.20 which is quite pricey for 3 weeks from expiry on a strike close to ATM. Etrade is showing N/A for both the IV and Time Value, Black-Scholes comes up with .88 seems closer to reality (newly issued July $29's are ~ .70 cents - unfortunately I can't buy to cover with these ...).
    I suspect the value of the 7 shares of SSE is embedded in the price of the adjusted calls but exercise is determined by CHK price not SSE ? Any options gurus know what is the deal with these ?
    Jul 2, 2014. 04:21 PM | Likes Like |Link to Comment
  • Aubrey McClendon makes a comeback with Utica shale deals [View news story]
    Wonder where the $1B startup funding came from ?
    Aug 16, 2013. 11:59 AM | 3 Likes Like |Link to Comment
  • Why We're Short Oil [View article]
    Thank you for interjecting some facts into this fluff article. It doesn't mention anything about the biggest short-term driver of recent oil spikes and crashes: speculators trading millions of barrels in futures contracts that will be rolled out and never delivered. So on a short-term weekly/monthly basis we are watching HFT derivatives-trading manipulation of the commodity price winning out over supply/demand fundamentals which will probably eat retail shorts for lunch.

    Thanks for the dramatic title but we never learn how or if you are actually short oil.

    My disclosure is I work in the industry, once for XOM and am still long their stock and a few others. Occasionally I am short USO via puts but can't recommend it, kind of like trying to short anything in this overall distorted market. Finally, yes the price of oil over the next 100 years is up because we have found and burned up a lot of it (I'm not going to touch the whole Peak Oil thing).
    Jul 12, 2013. 07:03 PM | 1 Like Like |Link to Comment
  • Devon Energy's (DVN +1%) move to transfer some assets into an MLP continues to be greeted with a yawn; shares are up today but in line with the sector. Peers such as Apache (APA) and Hess (HES), which also trade at discounted valuations, are seen to have more options and higher exposure to oil. "The catalyst to make the change at Devon is just not that obvious," says one energy investment banker. [View news story]
    Can someone explain how deals like MLP's and the trusts that CHK and SD used so aggressively the past few years are not dilutive to common shares of stock. Presumably they will issue separate shares for the MLP much like CHKM - how does this "create value" for current shareholders ? DVN doesn't need the cash unlike CHK did (and still does) so this smacks of "Me Too-itis" to try and gain some market love. Same goes for the Phillips 66 and the Marathon downstream spinoffs ?
    Jun 7, 2013. 05:25 PM | 1 Like Like |Link to Comment
  • Problems at the Pascua-Lama mine were already factored into Barrick Gold’s (ABX -2%) share price, and the slide after today's construction halt should be considered short-term, Gold Newsletter's Brien Lundin says. The $16M fine imposed by Chile is "immaterial" when contrasted to the $8.5B currently allocated to the project, Cowen analysts say. [View news story]
    Thank you for injecting some reality to the hullabaloo - would like to know what caused the halt in trading, smells like some HFT 'bot hitting the sell button real fast and then breakers kicking in. If I was cyncial, I might suppose it was a concious human decision to flash-crash the stock to get in at a lower price.

    This fine is just a small tax on the project, Chile doesn't want to kill the golden goose.
    May 24, 2013. 05:17 PM | Likes Like |Link to Comment
  • Chesapeake Energy: Will It Benefit From The Shale Gas Bonanza? [View article]
    Shale Gas Bonanza is so 2008, was fun while it lasted.
    May 24, 2013. 03:28 PM | Likes Like |Link to Comment
  • James Altucher: Why The Stock Market Is A Sucker's Game Right Now (And What Stocks I Own) [View article]
    As a geoscientist who worked GOM and currently works the Lime I almost fell off my chair when I read this. Very funny, like the guy who was claiming SD was worthless because he misread billions as million on their reserves statement.
    May 1, 2013. 10:27 AM | Likes Like |Link to Comment
  • Sinopec: Are Acquisitions An Ample Tonic? [View article]
    Thanks. I see what you are getting at - CRZO does look like a buyout target and its size makes it very affordable to a wide range of companies. It is small enough that the Feds might actually allow a Chinese buyout.

    As for SNP, does a state-owned entity need to make a profit as long as it provides for China's energy demands ? Isn't there some kind of implied or even explicit backstop from the government ? Sounds like its cost of capital is fixed by the government, in effect loaning money to themselves.
    Mar 6, 2013. 05:56 PM | Likes Like |Link to Comment
  • Sinopec: Are Acquisitions An Ample Tonic? [View article]
    What does CRZO's market cap have to do with a $1B CHK Miss Lime JV ? Did I miss something - was SNP considering buying out CRZO as an alternative to the CHK deal ?
    Mar 6, 2013. 05:09 PM | 1 Like Like |Link to Comment
  • To The Moon Tuesday: Damn The Torpedoes! [View article]
    Read Phil's correction in the comments - the bull call spread financed by selling the downside put results in a net debit, not the $10.50 credit mentioned in article. Max profit at expiry would be $450-350 = $100 less the cost of the spread + the premium collected for selling the put, about $83. AAPL would have to finish at $450 or above to max out the call spread and puts would expire worthless. You would have risked about $1700/spread to make $8300/spread. Keep reading Phil's stuff - he does these all the time.

    As for entering the 400/500 call spread today that's a tough one - it's down to about $37 so if you sold the Jan '15 $350 put against it you could put the trade on for free or even a small credit. That's tempting if you are ok with eating the stock at 350 although short of Iran nuking Cupertino I can't see AAPL down below that for two years. Mr. Davis obviously favors the safety of an expensive ITM spread which is how we got here. What would Sherman do ?
    Mar 6, 2013. 04:47 PM | 2 Likes Like |Link to Comment
COMMENTS STATS
71 Comments
107 Likes