ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> question is whether or not you are overpaying for that optionality
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.
The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
> the long-term outlook for the US consumer
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> reserves *could* be higher than reported
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
A (making these numbers up) analogy would be:
(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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
> reserves for what the reserve engineers say
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
Don't "those numbers" for proved reserves comply with the Petroleum Resources Management System guidelines which would mean that there is a 90% probability (P90 from a log-normal, or estimated 90% probability that the correct answer for the actual reserves will lie somewhere between the P90 and the P0 or maximum outcome)? Or did they use some other method to get "those numbers"?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
ECT has produced about 27 Bcf from the 33 wells for which they own the revenue rights. In that area of Pennsylvania dry gas wells produce recoverable production anywhere from 4 Bcf to much higher levels of 8 Bcf to 10 Bcf each (Range Resources has projected 20 Bcf from one particular well drilled in that same Southwest corner of Pennsylvania as the ECT wells, perhaps in the same county).
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.
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.
3D Printing - Opening Pandora's Box [View article]
Putting aside the nefarious purposes issue for the moment, and also putting aside the use of 3D-printers by the niche market of product designers and prototypers, is there ANY application of ANY kind currently that warrants purchase of these devices at home or by small businesses?
Chipotle Mexican Grill: As Stock Recovery Outpaces Fundamental Improvements, A Short Thesis Becomes More Appealing Again [View article]
> ...at today's valuation, the market values each restaurant around $7.9 million.
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???
Forget The Jobless Recovery, Get Ready For The Full-Employed Recession [View article]
> relationship between monthly nonfarm payrolls and the year-over-year change in the unemployment rate
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?
Chipotle: Overvalued And Uninviting [View article]
Sadly, it's after lunch and we haven't heard back from Phillips for several hours.
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???
Chipotle: Overvalued And Uninviting [View article]
> I have no interest in either side of the CMG trade
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!
Chipotle: Overvalued And Uninviting [View article]
Phillips, almost forgot to mention, there is a very very similar opportunity which started about a year ago (in which a bunch of investors bought shares between $375 and about $425) but who are looking to exit if you can find replacement investors. They are willing (almost anxious it seems) to get out flat and allow a new round of buyers the opportunity to experience the same kind of return that they've had.
Chipotle: Overvalued And Uninviting [View article]
Hey Phillips, I'm looking for some investors to put approximately $8 million into a 56 seat restaurant that will earn them a whopping 2.6% return (when customers are lined up practically out the door, but probably less if business slows down). I am planning to expand the restaurant every year by about 6 seats (around 11%), so their 2.6% return might improve to about 2.9% by next year. Howz about recommended some investors for this?
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
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
The End Of The Consumer? What The Long-Term Decline Of Consumption Means For Investors [View article]
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
(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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
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.
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
ECA Marcellus Trust - Distribution Falls 35% Sequentially [View article]
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.
LinkedIn After The Earnings: The End Of Amazing Growth Rates? [View article]
> 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.
3D Printing - Opening Pandora's Box [View article]
Chipotle Mexican Grill: As Stock Recovery Outpaces Fundamental Improvements, A Short Thesis Becomes More Appealing Again [View article]
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???
Forget The Jobless Recovery, Get Ready For The Full-Employed Recession [View article]
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?
Chipotle: Overvalued And Uninviting [View article]
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???
Chipotle: Overvalued And Uninviting [View article]
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!
Chipotle: Overvalued And Uninviting [View article]
Chipotle: Overvalued And Uninviting [View article]