marketquant's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.com/user/295583/comments http://seekingalpha.com/article/1443031/comments?source=feed#comment-18945621 18945621
2) Also, our cars were heavy and fuel inefficient back then.

3) And our houses were not as well insulated (especially the windows).

So when the oil-embargo crisis hit, inflation indexes were poised to skyrocket. Plus, we had to transform our electric grid, auto fleet, and home heating efficiency -- all of which took a LONG period of time -- while continuing to consume higher priced oil, until the efficiencies were in place.

Is that a simplified explanation for why inflation then doesn't compare to today? Or does that kind of adjustment not really matter?]]> Fri, 17 May 2013 11:24:18 -0400
2) Also, our cars were heavy and fuel inefficient back then.

3) And our houses were not as well insulated (especially the windows).

So when the oil-embargo crisis hit, inflation indexes were poised to skyrocket. Plus, we had to transform our electric grid, auto fleet, and home heating efficiency -- all of which took a LONG period of time -- while continuing to consume higher priced oil, until the efficiencies were in place.

Is that a simplified explanation for why inflation then doesn't compare to today? Or does that kind of adjustment not really matter?]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18907631 18907631
Production from typical wells looks like a ski slope (the steep "black" runs, not the gentler "green" runs) -- declining perhaps 70% over the first two years, before they flatten out and go on producing for years and years (and that would be unconstrained, and these wells were not always unconstrained).

So in this case, with 66 wells drilled and completed at different times, it is hard to know what "normal" should look like -- without seeing the production rates for each well individually.

Also, there is basically no need to revise the P90 reserve estimates for most of the wells during those first two years -- until they get past the knee-bend of production.

Sadly, the SEC standard P90 estimates are almost useless anyway, just read the section called "Nondiminishing Uncertainty" in that SPE paper that I linked above.]]> Thu, 16 May 2013 14:02:00 -0400
Production from typical wells looks like a ski slope (the steep "black" runs, not the gentler "green" runs) -- declining perhaps 70% over the first two years, before they flatten out and go on producing for years and years (and that would be unconstrained, and these wells were not always unconstrained).

So in this case, with 66 wells drilled and completed at different times, it is hard to know what "normal" should look like -- without seeing the production rates for each well individually.

Also, there is basically no need to revise the P90 reserve estimates for most of the wells during those first two years -- until they get past the knee-bend of production.

Sadly, the SEC standard P90 estimates are almost useless anyway, just read the section called "Nondiminishing Uncertainty" in that SPE paper that I linked above.]]> http://seekingalpha.com/article/1439991/comments?source=feed#comment-18902221 18902221
The problem with the alternative, which I guess is a version of austerity, is that it seems reasonably credible that the US gov't cannot EVER pay back it's debts.

That (I think reasonable) conclusion is: given our current demographics, the world's demographics, and the way our political system works, and perhaps that a decade down the road the global oil output will have noticeably dropped (whilst the US still imports more than 40% of our consumption).

So if I conclude that the US gov't cannot pay back its debts, then I must conclude (with those "givens" above) that money-printing will not stop and/or cannot be stopped.

It doesn't really matter whether Brad DeLong thinks it's a great idea or a terrible idea.]]> Thu, 16 May 2013 12:23:56 -0400
The problem with the alternative, which I guess is a version of austerity, is that it seems reasonably credible that the US gov't cannot EVER pay back it's debts.

That (I think reasonable) conclusion is: given our current demographics, the world's demographics, and the way our political system works, and perhaps that a decade down the road the global oil output will have noticeably dropped (whilst the US still imports more than 40% of our consumption).

So if I conclude that the US gov't cannot pay back its debts, then I must conclude (with those "givens" above) that money-printing will not stop and/or cannot be stopped.

It doesn't really matter whether Brad DeLong thinks it's a great idea or a terrible idea.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18854571 18854571
To your point, there were no net reserve estimate increases even as the PUD wells were developed and became additional developed producing wells (PDP wells).

That seems remarkably conservative, but the reserve engineering firm, Ryder Scott, has a Society of Petroleum Engineers paper (SPE-63202) that says:

"A common but, in our opinion, unacceptable trend in reserve evaluations has been to rely on probabilistic evaluations to boost reserve values if they cannot be supported by deterministic methods."

Other authors in other papers:

(from SPE-138843, regarding one well) "...provides Case 1... an estimated ultimate recovery (EUR) of 5.2 Bcf for a 3,000-ft-lateral/10-stage well, which is in line with typical well performance in the Marcellus shale."

(from SPE-140463, where "Area 1" is Greene County, PA, the same location as the ECT wells) "Wells in Area 1 have an average estimated ultimate recovery (EUR) per well of 4.5 Bcfe"]]> Wed, 15 May 2013 12:32:36 -0400
To your point, there were no net reserve estimate increases even as the PUD wells were developed and became additional developed producing wells (PDP wells).

That seems remarkably conservative, but the reserve engineering firm, Ryder Scott, has a Society of Petroleum Engineers paper (SPE-63202) that says:

"A common but, in our opinion, unacceptable trend in reserve evaluations has been to rely on probabilistic evaluations to boost reserve values if they cannot be supported by deterministic methods."

Other authors in other papers:

(from SPE-138843, regarding one well) "...provides Case 1... an estimated ultimate recovery (EUR) of 5.2 Bcf for a 3,000-ft-lateral/10-stage well, which is in line with typical well performance in the Marcellus shale."

(from SPE-140463, where "Area 1" is Greene County, PA, the same location as the ECT wells) "Wells in Area 1 have an average estimated ultimate recovery (EUR) per well of 4.5 Bcfe"]]> http://seekingalpha.com/article/897501/comments?source=feed#comment-18847201 18847201
What might look like 40% being short could effectively be nearly 100% short.]]> Wed, 15 May 2013 10:14:03 -0400
What might look like 40% being short could effectively be nearly 100% short.]]> http://seekingalpha.com/article/1431681/comments?source=feed#comment-18810931 18810931
I'd be very interested in the thoughts of asset allocators who are rotating to CASH -- assuming that there are any.]]> Tue, 14 May 2013 11:32:55 -0400
I'd be very interested in the thoughts of asset allocators who are rotating to CASH -- assuming that there are any.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18770141 18770141
http://bit.ly/11yQZCi]]> Mon, 13 May 2013 13:17:11 -0400
http://bit.ly/11yQZCi]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18769751 18769751
But there is only one more step to understanding!

Each of those values comes from a line drawn through the exact same log-normal distribution curve representing the reserve. There is only one curve that produces all 3 numbers -- all the numbers are embedded in the same graph *simultaneously*.

And the SEC could very well have defined "proven" as the P95 number taken from the distribution, or the P87 number taken from the distribution, or the P80 number, or whatever.]]> Mon, 13 May 2013 13:07:35 -0400
But there is only one more step to understanding!

Each of those values comes from a line drawn through the exact same log-normal distribution curve representing the reserve. There is only one curve that produces all 3 numbers -- all the numbers are embedded in the same graph *simultaneously*.

And the SEC could very well have defined "proven" as the P95 number taken from the distribution, or the P87 number taken from the distribution, or the P80 number, or whatever.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18767741 18767741 > now i see where you where confused

Each of the numbers P90, P50, and P10 are estimates. Agree or not?]]> Mon, 13 May 2013 12:28:12 -0400 > now i see where you where confused

Each of the numbers P90, P50, and P10 are estimates. Agree or not?]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18764981 18764981
I was just looking at a reserve report that showed a P50 value that is almost 4 times the P90 value, and I've seen plenty that are 3 times the P90 value. What kind of ratios have you seen?]]> Mon, 13 May 2013 11:33:43 -0400
I was just looking at a reserve report that showed a P50 value that is almost 4 times the P90 value, and I've seen plenty that are 3 times the P90 value. What kind of ratios have you seen?]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18727751 18727751
What do you mean by "volumes are not [known]" and "volumes have disappointed"?

Maybe you could quote some sell-side notes here.]]> Sun, 12 May 2013 07:35:36 -0400
What do you mean by "volumes are not [known]" and "volumes have disappointed"?

Maybe you could quote some sell-side notes here.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18684041 18684041
That Ryder Scott article is basically an admonition against improper calculations and lack of conservatism.

> NGT unitholders are not experienced investors

I was merely stating that those buyers had actually experienced holding a natural gas trust and desired to continue to do so.

> technical reasons

Netherland Sewell appears to be a great place to learn technical reasons.

> underperforming expectations

The only under-performance that I see was with respect to the price of natural gas.]]> Fri, 10 May 2013 14:09:12 -0400
That Ryder Scott article is basically an admonition against improper calculations and lack of conservatism.

> NGT unitholders are not experienced investors

I was merely stating that those buyers had actually experienced holding a natural gas trust and desired to continue to do so.

> technical reasons

Netherland Sewell appears to be a great place to learn technical reasons.

> underperforming expectations

The only under-performance that I see was with respect to the price of natural gas.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18675191 18675191
No thanks, under $11 was a good entry for me considering that there are technical reasons why these wells are probably above average ones.]]> Fri, 10 May 2013 11:22:34 -0400
No thanks, under $11 was a good entry for me considering that there are technical reasons why these wells are probably above average ones.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18674441 18674441
Certainly. How much more gas? What will prices do? But investors with experience in owning another trust (NGT) willingly bought 1.288m shares at $16.56 ($21m worth).

Here is a nice short article by the company that actually did the reserve report (Ryder Scott). Reading over those 6 pages will give insight into the uncertainties involved. And notice the "P90" reference toward the end.

http://bit.ly/179EZYM]]> Fri, 10 May 2013 11:10:25 -0400
Certainly. How much more gas? What will prices do? But investors with experience in owning another trust (NGT) willingly bought 1.288m shares at $16.56 ($21m worth).

Here is a nice short article by the company that actually did the reserve report (Ryder Scott). Reading over those 6 pages will give insight into the uncertainties involved. And notice the "P90" reference toward the end.

http://bit.ly/179EZYM]]> http://seekingalpha.com/article/1416211/comments?source=feed#comment-18668731 18668731
The outlook is so poor that it seems likely there will be increasing reliance on converting stock market equity into consumption -- not just stock dividend income, but SELLING ASSETS to support consumption.]]> Fri, 10 May 2013 09:19:13 -0400
The outlook is so poor that it seems likely there will be increasing reliance on converting stock market equity into consumption -- not just stock dividend income, but SELLING ASSETS to support consumption.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18664911 18664911
By the very same calculation that now conservatively shows the proven reserves at around 2.25 Bcf per well (i.e. there is a 10% chance that the ultimate answer is lower), the reserves could turn out to be 8 Bcf per well (i.e. there is simultaneously a 10% chance that the ultimate answer is that high). The occasional reporting of 8 Bcf, 10 Bcf, and larger wells bears out those chances embedded in that type of log-normal distribution.

And the P50 number for that same distribution is 4.25 Bcf per well (which would mean that 4 times as much gas is still left to come out). It's just not a clear case of wild overvaluation for a short position. The uncertainty is still quite high.

The boy analogy is perhaps appropriate because it is likely to take several *years* for more accurate assessments to cause reserve revisions, but there is a 90% chance that those revisions will be to the upside.]]> Fri, 10 May 2013 07:23:03 -0400
By the very same calculation that now conservatively shows the proven reserves at around 2.25 Bcf per well (i.e. there is a 10% chance that the ultimate answer is lower), the reserves could turn out to be 8 Bcf per well (i.e. there is simultaneously a 10% chance that the ultimate answer is that high). The occasional reporting of 8 Bcf, 10 Bcf, and larger wells bears out those chances embedded in that type of log-normal distribution.

And the P50 number for that same distribution is 4.25 Bcf per well (which would mean that 4 times as much gas is still left to come out). It's just not a clear case of wild overvaluation for a short position. The uncertainty is still quite high.

The boy analogy is perhaps appropriate because it is likely to take several *years* for more accurate assessments to cause reserve revisions, but there is a 90% chance that those revisions will be to the upside.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18650291 18650291
(1) a baby boy born 20" tall is 90% likely to eventually be >4'10" tall -- and so is considered 4'10" height "proven" by that standard

(2) the same boy, a year-old, who becomes 25" tall is 90% likely to eventually be >5'1" tall -- and so is considered 5'1" height "proven" by the same standard at that point

(3) the same boy, at 2-yrs old, who is 30" tall is 90% likely to eventually be >5'6" tall -- and so is considered 5'6" height "proven" by the same standard

The 50% probability numbers for each of the above would all be taller heights.]]> Thu, 09 May 2013 18:35:39 -0400
(1) a baby boy born 20" tall is 90% likely to eventually be >4'10" tall -- and so is considered 4'10" height "proven" by that standard

(2) the same boy, a year-old, who becomes 25" tall is 90% likely to eventually be >5'1" tall -- and so is considered 5'1" height "proven" by the same standard at that point

(3) the same boy, at 2-yrs old, who is 30" tall is 90% likely to eventually be >5'6" tall -- and so is considered 5'6" height "proven" by the same standard

The 50% probability numbers for each of the above would all be taller heights.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18648651 18648651
And what they say (the SEC reporting requirement that they follow, called PRMS) is the "P90" value or "proven" number, which means that the actual production is 90% likely to be higher than the number reported. Summarized by the SEC itself: "at least a 90% probability that the quantities actually recovered will equal or exceed the estimate."

It is not the "P50" number, which would mean that the production is 50% likely to be lower and 50% likely to be higher.

For example, if it is log-normal, and the mean for the Marcellus was 3 Bcf, with a standard deviation of 0.5 Bcf, then the engineers might report about 1.9 Bcf "proved" reserves -- even though the actual production of the average well with the same characteristics would be expected to be 58% higher. But neither you, nor I, have the values that allow an accurate estimate of that P50 value.]]> Thu, 09 May 2013 17:45:43 -0400
And what they say (the SEC reporting requirement that they follow, called PRMS) is the "P90" value or "proven" number, which means that the actual production is 90% likely to be higher than the number reported. Summarized by the SEC itself: "at least a 90% probability that the quantities actually recovered will equal or exceed the estimate."

It is not the "P50" number, which would mean that the production is 50% likely to be lower and 50% likely to be higher.

For example, if it is log-normal, and the mean for the Marcellus was 3 Bcf, with a standard deviation of 0.5 Bcf, then the engineers might report about 1.9 Bcf "proved" reserves -- even though the actual production of the average well with the same characteristics would be expected to be 58% higher. But neither you, nor I, have the values that allow an accurate estimate of that P50 value.]]> http://seekingalpha.com/article/1417821/comments?source=feed#comment-18632641 18632641 Thu, 09 May 2013 13:11:41 -0400 http://seekingalpha.com/article/1417821/comments?source=feed#comment-18621801 18621801
At a relatively modest 4.2 Bcf these wells would produce 138 Bcf over their life (~80% left to produce, or 4 times the $6.50 trailing distribution). At 6 Bcf these wells would produce nearly 198 Bcf over their life (~86% left to produce, or 6 times the $6.50 trailing distribution).

Your $11.40 total distribution for each of the 17.6 million units would equate to about $200m (remaining over the life), which at $4/mcf would mean that the 33 wells would produce about 2.34 Bcf per well -- which would be some of the worst wells ever drilled in that area of the Marcellus.]]> Thu, 09 May 2013 10:12:34 -0400
At a relatively modest 4.2 Bcf these wells would produce 138 Bcf over their life (~80% left to produce, or 4 times the $6.50 trailing distribution). At 6 Bcf these wells would produce nearly 198 Bcf over their life (~86% left to produce, or 6 times the $6.50 trailing distribution).

Your $11.40 total distribution for each of the 17.6 million units would equate to about $200m (remaining over the life), which at $4/mcf would mean that the 33 wells would produce about 2.34 Bcf per well -- which would be some of the worst wells ever drilled in that area of the Marcellus.]]> http://seekingalpha.com/article/1414481/comments?source=feed#comment-18614701 18614701 > 2013 Q2 revenue guidance is $342-$347M

Quarter to prior quarter revenue changes were:

Q1-2012: +$20.7m
Q2-2012: +$39.8m
Q3-2012: +$23.8m
Q4-2012: +$51.6m

Q1-2013: +$21.1m
Q2-2013: +$17.3m to +$22.3m (from guidance)

With the stock astronomically high priced, and this year's revenue increments weak (and possibly disastrous at +$17.3m), and insider selling robust, and even forward EBITDA is over 60 times, this is a fat pig flying -- which is even harder than a regular pig flying.]]> Thu, 09 May 2013 07:32:54 -0400 > 2013 Q2 revenue guidance is $342-$347M

Quarter to prior quarter revenue changes were:

Q1-2012: +$20.7m
Q2-2012: +$39.8m
Q3-2012: +$23.8m
Q4-2012: +$51.6m

Q1-2013: +$21.1m
Q2-2013: +$17.3m to +$22.3m (from guidance)

With the stock astronomically high priced, and this year's revenue increments weak (and possibly disastrous at +$17.3m), and insider selling robust, and even forward EBITDA is over 60 times, this is a fat pig flying -- which is even harder than a regular pig flying.]]> http://seekingalpha.com/article/1403871/comments?source=feed#comment-18578821 18578821 Wed, 08 May 2013 11:10:08 -0400 http://seekingalpha.com/article/1410961/comments?source=feed#comment-18569551 18569551
Maybe Chipotle should divide their 56-seat burrito restaurants up into some (at equivalent “valuation”) $560,000 per ‘Table-For-4’ REITs that would pay out a whopping 2.5% return!

Heck, they could even skip building new locations altogether and just put HALF those doofus investor’s money into a reasonably priced 5% yielding REIT – keeping the other half of the money themselves for executive pay and perks!

Why is it that investors even attempt to defend this “$8 million per burrito restaurant” valuation???]]> Wed, 08 May 2013 08:01:29 -0400
Maybe Chipotle should divide their 56-seat burrito restaurants up into some (at equivalent “valuation”) $560,000 per ‘Table-For-4’ REITs that would pay out a whopping 2.5% return!

Heck, they could even skip building new locations altogether and just put HALF those doofus investor’s money into a reasonably priced 5% yielding REIT – keeping the other half of the money themselves for executive pay and perks!

Why is it that investors even attempt to defend this “$8 million per burrito restaurant” valuation???]]> http://seekingalpha.com/article/1408041/comments?source=feed#comment-18552411 18552411
That looks like about 60 data points (60 years). What do the latter half of the data points look like? Different or about the same scatter along the fit?]]> Tue, 07 May 2013 16:34:58 -0400
That looks like about 60 data points (60 years). What do the latter half of the data points look like? Different or about the same scatter along the fit?]]> http://seekingalpha.com/article/1404941/comments?source=feed#comment-18544141 18544141
I am disappointed.

I was sure that he could be convinced to endorse $8 million restaurant investments to folks out there.

Perhaps he thinks that there is NO DIFFERENCE between buying a burrito (because you like it and is reasonably priced) and buying a stock.

A stock is CLEARLY different than a burrito, so the same rules need not apply! Let me explain...

A burrito will not last forever and cannot be re-sold, so a person needs to be VERY cautious about what they pay for one they like. The risk is that they'll continue to keep paying way too much, repeating their mistake over and over. And that would just not be reasonable.

However, a person does NOT eat a stock, so they only have to buy it once, and therefore should not care about whether it is reasonably priced. The memory of the stock price will fade because it is a one-time one-way transaction.

Got that Phillips? I mean if REASONABLE people like you cannot be convinced to buy $8 million restaurants then what kind of investors do we have left here???]]> Tue, 07 May 2013 13:38:49 -0400
I am disappointed.

I was sure that he could be convinced to endorse $8 million restaurant investments to folks out there.

Perhaps he thinks that there is NO DIFFERENCE between buying a burrito (because you like it and is reasonably priced) and buying a stock.

A stock is CLEARLY different than a burrito, so the same rules need not apply! Let me explain...

A burrito will not last forever and cannot be re-sold, so a person needs to be VERY cautious about what they pay for one they like. The risk is that they'll continue to keep paying way too much, repeating their mistake over and over. And that would just not be reasonable.

However, a person does NOT eat a stock, so they only have to buy it once, and therefore should not care about whether it is reasonably priced. The memory of the stock price will fade because it is a one-time one-way transaction.

Got that Phillips? I mean if REASONABLE people like you cannot be convinced to buy $8 million restaurants then what kind of investors do we have left here???]]> http://seekingalpha.com/article/1404941/comments?source=feed#comment-18535091 18535091
Phillips, OK, so my alternate proposal is to buy an entire 20,000 square foot shopping center for $8 million (with enough room for about 8 Chipotle restaurants) that is earning 5.75% and is for sale in beautiful seaside Dana Point, California (check the CBRE listing).

But I know that you are probably still thinking about the restaurant business. How many $8 million restaurant opportunities are out there in the WHOLE WORLD???

It turns out that there are actually very few -- literally only ONE comes to mind.

So think of this as a "uniquely priced" restaurant opportunity for investors you might find. With customers lined up practically out the door it earns 2.6%!!! Reconsider, don't let this continue to slip away!]]> Tue, 07 May 2013 10:52:20 -0400
Phillips, OK, so my alternate proposal is to buy an entire 20,000 square foot shopping center for $8 million (with enough room for about 8 Chipotle restaurants) that is earning 5.75% and is for sale in beautiful seaside Dana Point, California (check the CBRE listing).

But I know that you are probably still thinking about the restaurant business. How many $8 million restaurant opportunities are out there in the WHOLE WORLD???

It turns out that there are actually very few -- literally only ONE comes to mind.

So think of this as a "uniquely priced" restaurant opportunity for investors you might find. With customers lined up practically out the door it earns 2.6%!!! Reconsider, don't let this continue to slip away!]]> http://seekingalpha.com/article/1404941/comments?source=feed#comment-18529031 18529031 Tue, 07 May 2013 08:47:43 -0400 http://seekingalpha.com/article/1404941/comments?source=feed#comment-18525971 18525971 Tue, 07 May 2013 07:16:14 -0400 http://seekingalpha.com/article/1404941/comments?source=feed#comment-18488641 18488641
I really don't think the ambiance is worth that much.]]> Mon, 06 May 2013 09:30:43 -0400
I really don't think the ambiance is worth that much.]]> http://seekingalpha.com/article/1399641/comments?source=feed#comment-18486471 18486471
In electric buses NF appears to be way behind other companies in getting something on the streets, but I cannot figure out yet whether it will turn out to be a case of "second mouse gets the cheese" or "early bird got the worm".]]> Mon, 06 May 2013 08:35:29 -0400
In electric buses NF appears to be way behind other companies in getting something on the streets, but I cannot figure out yet whether it will turn out to be a case of "second mouse gets the cheese" or "early bird got the worm".]]>