Seeking Alpha

Carolina1954

Carolina1954
Send Message
View as an RSS Feed
View Carolina1954's Comments BY TICKER:
Latest  |  Highest rated
  • Emerald Oil misses by $0.03, misses on revenue [View news story]
    "They deliver on operations"

    "Results seem pretty solid".

    With respect, what criterion do you folks use to determine that management has "delivered solid results"?

    There is little to point to in this regard except production growth, but you should realize that you can get almost any amount of production growth from oil bearing land if you throw enough money at it. The real question for EOX or any E&P is: at what cost is the production achieved? Under GAAP, a large proportion of production cost is capitalized, i.e., deferred for later recognition, which can mask sub-economic operations for years while investor value is destroyed with every turn of the drill bit.

    Anyone who thinks EOX is an operational success should read and perhaps reread Michael Filloon's article of November 2014, in which he demonstrated that EOX's best well, the Pirate 1, will not pay back for at least four years, and the average EOX well will do worse than that. That is, EOX's BEST well will not pay back its drilling cost for at least four years, let alone contribute to EOX's bloated A&G or other corporate level expenses. (Bear in mind that very high oil prices prevailed for much of that four year period.)

    Any one who read Filloon's article and understood its implications discovered, if they did not already know, that EOX is an economic loser inevitably headed for penny stock status, which of course is where it is now.

    C. David Kirby
    May 4, 2015. 10:53 PM | 1 Like Like |Link to Comment
  • Celladon: CUPID-2 Is Likely To Fail [View article]
    Too bad they don't "vent" commenters as well.
    Apr 25, 2015. 11:58 PM | 2 Likes Like |Link to Comment
  • Emerald Oil: Debt Covenant Appears To Have Prompted Filing To Sell Up To $100M In Shares [View article]
    "Great value added commentary!"

    Elaine Thompson's numerous comments on EOX have indeed been "value adding" for those wise enough to heed them. "Value adding" in the sense of avoiding the near total loss of value sustained by EOX longs.

    C. David Kirby
    Apr 9, 2015. 09:16 PM | 2 Likes Like |Link to Comment
  • Will Penn West Survive The Free Fall In Oil Prices? I Think So [View article]
    1GreatCFA,

    Full quote from November: "Tax year end loss harvesting takes this to $2 ladies. Then I will buy."

    Congratulations to you (and Uncle Pie) for being right all along on peewee.

    Are you buying at ~$2? I'm not.

    Cheap POS = POS.

    C. David Kirby (long BXE, BIR, DTHRF)
    Feb 28, 2015. 09:43 AM | 3 Likes Like |Link to Comment
  • Halc√≥n Resources: Strong Cost Reductions Are The Highlight Of The Operating Report [View article]
    jim8millar,

    Halcon has made surprisingly good progress in hedging both 2015 and 2016 production. Here are some comments by CFO Mark J. Mize from the recent CC:

    "While our hedging for 2015 is complete, we'll continue to layer in additional hedges in 2016 to attempt to hedge about 80% of what we expect to produce at an average floor of no less than $80."

    "But we don't have that much further to go to reach our goal of about 80% of [2016] anticipated production hedge at around $80."

    The expectation that HK goes poof when its 2015 hedges expire may be overdone. Hedging most production for two years at ~$80 combined with large cost reductions provides a basis for Floyd Wilson's confidence that HK can ride out the pricing down-cycle

    Mr. Mize earned his bonus this year.

    C. David Kirby
    Feb 26, 2015. 02:13 PM | Likes Like |Link to Comment
  • Bellatrix Exploration - Attempting To Do More With Less [View article]
    Mr. Holzman,

    Mr. Banser's article is consistent with BXE management projections. I find the projections of increased production credible for the following reasons:

    1) In 2014, production was constrained by lack of pipeline and processing infrastructure. These bottlenecks are expected to be relieved in 2015 allowing greater production from wells already drilled.

    2) BXE's Spirit River acreage (about half its total drilling locations) has some of the highest IRRs in Canada (according to Canaccord) and remains highly economic even under today's pricing. BXE's reduced drilling budget will focus exclusively on this highly prolific acreage.

    C. David Kirby
    Feb 18, 2015. 07:11 PM | 7 Likes Like |Link to Comment
  • Avoid Alberta Junior Oil And Gas Players Until Market Conditions Stabilize [View article]
    Mr. Filice,

    "Until there is some level of visibility regarding the outlook on crude prices I would advise against averaging down or entering a position in the Alberta oil and gas sector."

    I think it would be very helpful if you could elaborate on this. What "level of visibility" of the oil price do you think is necessary before investing and how will you know when it has been attained?

    C. David Kirby
    Feb 18, 2015. 03:50 PM | 2 Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Qniform,

    Debt/capital ratios may be comparable, but PWE struggled during the $100 oil era, while BXE flourished. BXE's Spirit river acreage has the highest IRRs in western Canada according to Canaccord and remains economic to drill under current pricing.

    IMO, BXE has better management and better assets than PWE and will be better able to maintain financial stability in a low price era.

    C. David Kirby
    Feb 13, 2015. 12:21 PM | Likes Like |Link to Comment
  • Penn West Could Be Headed Towards CBCA Debt Restructuring If Oil Prices Remain Low [View article]
    Mr. Vranic,

    I greatly appreciate your article as I have been building positions in some Canadian E&Ps. You are absolutely right that anyone bottom fishing in these waters needs to know about CBCA risk.

    I agree that Lightstream and Penn West have dire risks of CBCA or BK if oil and gas prices remain at current levels long term, or even intermediate term (2-3 years.) For me they're too risky.

    What I've been trying to do is identify E&Ps with SPs that have been crushed almost as much as LTS and PWT, but have much better economics and prospects of recovery without the need for recapitalization.

    BXE may be one of the better examples of an E&P with this kind of turnaround potential.

    Have you analyzed the recapitalization risk for BXE?

    Have you identified any E&P turnaround candidates with relatively low CBCA risk?

    Thanks,

    C. David Kirby
    Feb 10, 2015. 12:44 PM | 1 Like Like |Link to Comment
  • Thoughts On Oil [View instapost]
    J.,

    Glad you were able to get out of EOX without much loss. I feel bad for those who got in at peak hype at around $8-$9. Their capital is mostly gone I'm afraid, and probably won't come back even if the oil price does.

    If you're into humor of the darker sort, check out John Hempton's blog post about EOX's illustrious executive chairman.

    http://bit.ly/1C7zJ2N

    David
    Feb 10, 2015. 10:42 AM | Likes Like |Link to Comment
  • Bellatrix Exploration Trading At 23% Of Its Fairly Valued Price [View article]
    Mr. Glenn,

    Your calculation of $46M gas revenues for 2015 isn't correct.

    Here's the correct calculation: 43,500 boe/d X 67% gas ratio X 6 mcf/boe ratio X $4.36/mcf gas price X 365 days = $278,288,118.

    You have to covert boe to Mcf.

    I agree with your basic conclusion that BXE is grossly undervalued.

    C. David Kirby
    Feb 10, 2015. 10:17 AM | 5 Likes Like |Link to Comment
  • Bakken Junior Emerald Oil Is Worth A Strong Look [View article]
    hueyuh1,

    EOX bulls should definitely check out your history info. They might also check out John Hempton's piece on the Reger boys of NOG and EOX fame.

    http://bit.ly/1C7zJ2N

    There you will learn that James Reger, executive chairman of EOX, is a convicted game poacher/trespasser (six month suspended sentence).

    Don't miss Chairman Reger's terpsichorean Facebook profile photo.

    Can't make up stuff like this.
    Feb 8, 2015. 02:16 PM | 1 Like Like |Link to Comment
  • Bakken Junior Emerald Oil Is Worth A Strong Look [View article]
    As I predicted in an earlier comment, EOX will be able to keep the lights on and drill bits turning only by further rounds of equity dilution. The latest offering was for $25 million at a miserable ~$1/share. That's an increase in common shares of ~37% at a time when well drilling is falling to near zero.

    If, as claimed, EOX has plenty of liquidity and is moving to free cash flowing status later this year, why would they suddenly need $25 million badly enough to raise equity at such exorbitant cost? Who knows, but a partial explanation may be cash burn resulting from EOX's outlandish G&A expense. Overhead expenses don't necessarily diminish when revenues collapse.

    When an entire sector collapses, the most efficient firms usually come back strong once conditions improve, but the losers get snuffed.

    C. David Kirby
    Feb 8, 2015. 02:20 AM | 3 Likes Like |Link to Comment
  • Thoughts On Oil [View instapost]
    "if oil recovers, EOX is a 5-10x easily"

    In order to keep the lights on and drill bits turning, EOX did yet another equity raise, this time for $25 million at a miserable ~$1/share. That's an increase in common shares of ~37% at a time when well drilling is falling to near zero.

    If, as claimed, EOX has plenty of liquidity and is moving to free cash flowing status later this year, why would they suddenly need $25 million badly enough to raise equity at such exorbitant cost? Who knows, but a partial explanation may be that EOX spends an unusually large proportion of its revenues on G&A expense. Overhead expenses don't necessarily diminish when revenues collapse.

    When an entire sector collapses, the most efficient firms usually come back strong once conditions improve, but the losers get snuffed.

    C. David Kirby
    Feb 6, 2015. 11:49 AM | Likes Like |Link to Comment
  • 3 Small Cap Bakken Oil Companies Who May Not Survive The Oil Price Plunge [View article]
    I was once long EOX but got out at ~$7 after taking a deeper look into its economic value and financial performance. (Unfortunately, I wasn't smart enough to go short.)

    Before investing your hard earned capital in EOX, I suggest reading Michael Filloon's Nov. 12 SA article on EOX, in which he calculates that EOX's best well will take over four years to pay back, even though ~$100 oil prevailed during much of the four years. The average EOX well will take much longer than that just to pay back drilling costs, let alone recover overheads and return a profit to shareholders.

    Also consider the repeated rounds of share issuances EOX has been forced to resort to in order to keep the lights on and drill bits turning. Yesterday EOX did yet another equity raise, this time for $25 million at only ~$1/share. That's an increase in common shares of ~37% at a time when well drilling is falling to near zero.

    So why does EOX suddenly need $25 million? Who knows, but bear in mind that EOX spends a large proportion of its revenues on G&A expense. Overhead expenses don't necessarily diminish when revenues collapse.

    Most investors who wish to take advantage of low E&P stock prices should look at quality names like EOG and steer clear of losers that could go bankrupt if the oil price does not quickly recover.

    C. David Kirby (no position in EOX)
    Feb 6, 2015. 08:31 AM | Likes Like |Link to Comment
COMMENTS STATS
206 Comments
375 Likes