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justy727

justy727
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  • Peabody Energy: Buy It Here While You Can [View article]
    After Walter Energy "WLT" declares chapter 11 bankruptcy, and once the price of oil recovers, BTU will probably be among the best stocks to own. Curious if Alpha Natural Resources or Arch Coal will make it without declaring bankruptcy. The latter two are the wild cards, and BTU might go a little lower, then spike at any bankruptcies of their competitors.

    Another wild card, is Southeast Asian dumping of steel products and scrap in the U.S., damaging our Steel industry. China appears to have pumped in 2011 and when coal prices spiked and dumped in more recent years. U.S. imposed import tariffs on South Korea for finished steel products, then found out China's exporting the same stuff "below" market prices to the U.S. (among the biggest purchasers were the shale drillers for piping) and imposed import tariffs on China. (This paragraph's information was gathered from the Wall Street Journal).

    This appears to be the bottom of the commodity down cycle, but who knows for sure. I bet if you throw a dart at most basic materials companies, like natural gas producers, and you will probably find a double within the next 2 years. Will be watching hawkishly to make a move around coal within the year.

    Oil, coal, (and natural gas historically), appear to trade together. So a rising tide may lift all boats. My money is in natural gas now, and hopefully coal soon!
    Apr 23, 2015. 09:33 AM | 1 Like Like |Link to Comment
  • Exco Resources enters partnership with Bluescape Resources [View news story]
    In a sense, this is a rights offering for Bluescape.
    Apr 22, 2015. 01:29 PM | Likes Like |Link to Comment
  • Study finds rising radon levels in Pennsylvania homes amid fracking surge [View news story]
    Wald,

    Very sorry to hear about what happened to your wells and land. That is very unfortunate. Did your water clear out when they stopped drilling in the area?

    Examples like yours are serious, and many people don't seem to get the facts right in regards to what's actually occurring and the effects of BOTH fracking and our need for oil in the U.S. economy. Our oil deficit is astounding. Hopefully, whichever company polluted your water, rectifies the situation and is more careful in the future.
    Apr 12, 2015. 02:37 PM | 1 Like Like |Link to Comment
  • Exco Resources enters partnership with Bluescape Resources [View news story]
    This partnership with Bluescape seems sketchy to me. I can't tell if this is another form of fancy financing down the road, a trick to keep the stock down so they can partner up and buy on the cheap, or if Exco's board is giving up! I'm using my shares to vote against authorizing Exco to dilute itself another 80 million shares deep. Not like it will matter since the big guys will vote for it. But for Christ's sake, the board needs to figure out how to create shareholder value and stop milking the little people.

    25% dilution last year, and another 30% on top of that within the next 6 years (if the stock performs).... They should just offer a reasonable buy out price for the common stock now and take this one off the market while everything is cheap in the energy sector.

    When oil/gas prices rise, the tide will likely lift all boats and they won't be able to rob the cradle like they can now... Just wait until they find oil in the Budha.

    -Justin
    Apr 12, 2015. 02:16 PM | Likes Like |Link to Comment
  • EXCO Resources: Weathering The Storm [View article]
    About Chazsf's PV-10 strip pricing comment: Does this include KKR's properties that Exco sold to them and are buying back?

    Remember that the cash generated from these properties counts against the re-purchase price that Exco pays to get them back. Also, their revolving credit should increase incrementally with these purchases.

    A few more thoughts: Exco has already written off most of their natural gas asset values back in 2013 after the price plummeted under $2/btu, so future write downs would likely only be related to their oil assets.

    2/3 of Exco's current debt is related to their Chesapeake purchase when natural gas was at an all time low, (although oil was in the mid $90's per barrel if I recall correctly).

    Either $1-$2 common shares is the best time ever to buy shares, or the company gets de-listed from NYSE and just goes bankrupt. Looking at worst case, why/how would they go bankrupt, when they could simply sell an asset? Since when has oil remained this low for more than a year?
    Mar 19, 2015. 10:05 AM | Likes Like |Link to Comment
  • EXCO Resources: Weathering The Storm [View article]
    It's hard to imagine another equity sale after all its dilution from last year. The "optionality" Exco speaks of (in regards to their Marcellus assets), will likely be sold as commodity prices recover later in 2015 or 2016.
    Feb 27, 2015. 01:31 PM | 1 Like Like |Link to Comment
  • EXCO Resources suspends dividend [View news story]
    One other note:

    Yesterday in the Wall Street Journal, there was an article about how much money KKR had to write off on their oil and gas investments. It didn't name Exco specifically, but I'm thinking that they would surely have written down the carrying value of these holdings.

    One of KKR's executives went on to say that he 'believes there is significant value in the oil and gas sector and that they will be looking to buy more soon.'
    Feb 12, 2015. 01:35 PM | Likes Like |Link to Comment
  • EXCO Resources suspends dividend [View news story]
    DeepValueLover,

    Simple, nearly all of their debt is in the form of senior unsecured notes, $1.25 billion. They do not have to pay this back until 2018 ($750 million), and 2022 ($500 million). Other than dividends on common stock (which have been eliminated), they only need to pay back their interest on these senior notes.

    Much of their natural gas production for 2015 has been hedged (65% according to their last press release), though Exco won't realize the full benefit of this since it is a 3-way collar contract that only protects them down to the mid $3 range for natural gas. 50% of their oil production for 2015 is hedge slightly above $90 a barrel.

    What will be most interesting to see this year with Exco, is how their KKR deal plays out, especially considering the low current prices of oil. Since half of oil production is hedged at $90, and the actual price is lower, then the PV-10 value assigned to each well should be substantially lower on the offers from Exco to KKR.

    It is my understanding that as long as Exco produces a 20% rate of return for KKR above their drilling expenses, then KKR is required to accept the offers.

    I believe that with the recent oil price slump and the beginning of a potentially large decline in shale drilling, that this might be the reset for the shale industry to finally support higher natural gas prices in the near future.

    Lastly, the Energy Information Agency that releases reports Thursdays at 10:30am usually has a significant impact on natural gas pricing. As we begin exporting natural gas, I believe we should see larger declines in this weekly number and probably higher prices.

    Good luck to all on your investments,
    -Justin
    Feb 12, 2015. 01:27 PM | Likes Like |Link to Comment
  • EXCO Resources suspends dividend [View news story]
    It's ABOUT TIME! Douglas Johnston (of seeking alpha) predicted this would happen last year. Now that Wilbur and Prem have cleaned out Exco's cash coffers, eliminating the dividend wiped out an entire group of investors who only invest in dividend paying stocks.

    How low can the stock go? About to initiate my final purchase of their common stock and wait for LNG exports to begin in late 2015 or a buyout by the big guys at a pathetic price to recover and make a few bucks....

    Although a buyout wouldn't be too terrible, just because there are tons of deals in the shale sector to be had. Throw a dart, and enjoy the next 2-10 years of gains.
    Dec 15, 2014. 11:26 AM | Likes Like |Link to Comment
  • EXCO Resources: Still Waiting For An Operational Inflection Point [View article]
    Great article!

    A lot of time, thought, and details put into this!

    Listening to the Q4 conference call, it seemed they were intentionally holding back production in South Texas (well completions), because of the central production facility coming online this quarter.

    Not exactly sure why the board of directors is protecting the dividend so much! Because they own close to half the common stock, half of it goes directly back to them, which I can understand.

    I think you may be right about the Marcellus assets. I've been predicting a sale of those assets for about a year now. It's outside of their core operating areas, and I could see them announcing a sale of the Marcellus assets before year-end or early first quarter before they buy-back from KKR in Eagleford. This is also when natural gas prices seem to be at their highest due to seasonal demand for it and the likelihood of Exco fetching a better price also would be higher.

    -Justin
    Nov 5, 2014. 09:14 AM | Likes Like |Link to Comment
  • EXCO Resources: Compass Divestiture Simplifies Corporate Structure, Improves Credit Profile [View article]
    My prediction for just over a year now, is that Exco will sell their Marcellus assets. It is far from their core area, and other than what the Executives from Exco said on their last conference call (about it "providing optionality"), can't think of a reason for them to keep it.

    The longer they wait, the more likely that natural gas prices will be higher, and fetch a better deal on the Marcellus assets.

    I can't believe Exco's stock price is this low! Douglas Johnston, sounds like you did the same thing as me with cheap roll the dice call options. Lol, I'm raising cash myself to buy more shares within the week. Really hoping they go down this week so I can average down substantially.
    Oct 23, 2014. 09:57 PM | Likes Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    Douglas Johnston,

    You raised a good point just now! I've heard that some hedge funds can't buy "sub $5 stocks." Unfortunately, I know very little about that topic. Is this a rule they give themselves, some sort of industry standard, or is it an official brokerage rule?

    Also, I would be interested to hear where your biggest interest is in the energy sector and what you're buying..... You mentioned that you bought some XCO in the mid $3's I believe?

    Are you planning to write an article about natural gas or any energy stocks anytime soon???
    Oct 18, 2014. 03:17 PM | Likes Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    Disclosure: I own thousands of shares of Exco at a loss. Bought between $5-$7. On Friday and Monday I bought a few thousand more through cheap 5 month $3 strike call options when it was trading between $2.20-$2.30. Next year, beginning with Cheniere Energy, the U.S. begins exporting LNG, and I believe the market hasn't priced this into natural gas prices at all. Betting big on Exco under $10 a share. Hoping they don't get bought out before this happens...
    Oct 15, 2014. 09:29 PM | 2 Likes Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    One other point I forgot to mention while I was at work and wrote my comment, and will probably not be proven or shown until it is too late to invest in the energy sector as a whole. This is theoretical, and primarily applies to Exco. MARGIN CALLS! It was the first real news that could explain the energy sector decline, and most applicable to Exco!

    FINRA has a rule for most, if not all brokerage accounts. If someone owns a stock on margin (credit), they are required to have a minimum cash to market value ratio. For stocks above $5, a brokerage like Scottrade requires that their investors have at least a 30% cash position in that security, $3-$5 stock a 50% cash position. Under $3, a stock is no longer marginable!

    READ THAT LAST SENTENCE AGAIN! It explains my entire point!

    On October 2nd, Exco breached the $3 mark, and sustained it for more than 5 days! This forced everyone on Margin to liquidate a large portion of their holdings, OR put serious cash into their portfolios to hold their position.

    I believe this is why Exco's price declined from the $2.90 level, to an even more oversold price of approximately $2.19 a share this past Monday. This is also my theory on why the energy market got oversold in the last 2-3 weeks. Saudi Arabia not reducing oil production (as supposedly anticipated) was probably only the first part of what set off so many margin calls. Be prepared for a an energy sector rally by year-end.

    Btw, thanks for the comments above ;)

    Oct 15, 2014. 09:22 PM | 1 Like Like |Link to Comment
  • Is EXCO Missing Favorable Market Movements [View article]
    This article is misleading at best! While I can appreciate some of the data you referred to in regards to the Energy Information Agency, your analysis of Exco lacks any hard facts.

    Firstly, Exco didn't hedge ALL of their natural gas production. They hedged a small portion of it. I believe their debt covenants still require them to do this. In their last conference call, Exco executives told analysts they also believe gas prices will be a lot higher than currently, and that is why they significantly less hedges than prior years.

    Secondly, the Haynesville shale purchase is Exco's main core area. It is almost exclusively dry natural gas, so their purchase from Chesapeake added to their primary focus (natural gas). The Eagle Ford purchase did help diversify Exco's portfolio into a more oily play.

    Thirdly, when oil prices drop, this leaves the possibility and potential for a cheaper re-acquisition price for Exco to buy back their assets in the Eagle Ford for a cheaper price. In other words, it isn't a complete negative for oil prices to decrease. Not to mention that Exco predicted oil prices would decline and hedged a portion of their oil production at prices higher than the current market price for WTI oil.

    Fourthly, Exco can always increase production if rates rise and they want to. If they are able to lock in those higher rates through hedging or some other type of production agreement, they might want to do this.

    Conclusion: Please don't talk down a company unless you have some hard facts to back up your points.
    Oct 15, 2014. 09:47 AM | 9 Likes Like |Link to Comment
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