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  • It Was Never About Oil Part 2; It Was Always Leverage And Volatility  [View article]
    Interesting. Thank you.

    I would suggest, however, that you ALWAYS actually define terms before you use the "defined" term. People get very annoyed when they find CAPBLOCK and go back and look for a definition, but there is none. Even those versed in an area can have memory lapses.
    Feb 11, 2016. 09:36 AM | Likes Like |Link to Comment
  • $40 Oil Could Result In SandRidge Using Up Most Of Its Cash In 2016  [View article]
    Good comment. Good article.

    Absolutely horrible company. This company was doomed in 2012. I'm amazed they have enough money left to keep the life support on.

    The billions and billions and billions of dollars of other people's money they squandered on a no chance play is just reprehensible.

    Just on general principles, someone needs to beat the monkey snot out of Tom Ward and the BOD, which will continue to pay themselves fat salaries and will run through every single cent that the creditors and equity owners might otherwise get.
    Feb 11, 2016. 05:19 AM | Likes Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    @mirkomwfritz--

    They are out to get you too.
    Feb 6, 2016. 02:11 AM | Likes Like |Link to Comment
  • Cabot Oil And Gas: Playing Conservatively  [View article]
    Anyone investing in the E&P sector who has not read Raw Energy's articles on full cost vs. successful efforts accounting should do so.
    Feb 6, 2016. 02:09 AM | Likes Like |Link to Comment
  • Cabot Oil And Gas: Playing Conservatively  [View article]
    Thanks Richard--

    Great article.
    Feb 6, 2016. 02:09 AM | Likes Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    @Gigem77--

    Yeah, the Marcellus and Utica are maybe even a little too good for their own good . . . .
    Feb 6, 2016. 02:09 AM | 2 Likes Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    @Courage & Conviction Investing --

    Make sure to read Richard Zeits new article on COG. For the next couple of years at a minimum, it is all about the Marcellus and Utica.

    In three years people will be saying "so CHK spent a lot of money on buying Mississippian Lime, Barnett, and Haynesville assets and drilling wells-- that is why they aren't around any more."

    Past costs are past costs: They are not going to matter squat to the future of the industry or production going forward. Some companies go kaput, people lose money, and the stuff that has the potential to be economic without the debt burden keeps going.

    What is going to matter is Marcellus and Utica costs and takeaway capacity, and where and when there is actual demand.

    COG hedged at 2.51 and probably felt lucky to get that. If you are waiting for natural gas to take off, well, you might want to hold off on suiting up and strapping in: Gonna be a while before you see space. In fact, its gonna be a while before you see the other side of the hill.
    Feb 6, 2016. 02:02 AM | Likes Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    Makes sense. Building out to get takeaway capacity sufficient for the max that both could do would be wretched excess.

    Of course, if there is one thing our natty E&P producers are skilled at, it is producing to wretched excess; they frequently seem to be on a mission to pour vast quantities on anything that even resembles good margins.

    But, in this case there is also already a ton of takeaway planned and in the works. I think they actually at some point get ahead of anticipated production that would need it. I have a couple of graphs from different sources with the two estimated amounts over time on them.

    Then, of course, we also have the parts of the Marcellus with higher clay content that is wet. I'm betting that those areas get in the queue at some point too: Using LPG to frack with might be a likely place to start, as well as just completing them, choking them back somewhat, and letting them run for a good long time.

    I quite literally would take the Marcellus/Utica over any other play on Earth -- that I can think of anyway.
    Feb 4, 2016. 04:51 AM | 1 Like Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    @Gilariverman--

    This may surprise you, but . . . . you got it!

    "It looks like the good wells in the dry Utica of SW PA/N. WV, will have incredible EUR's of about 20 bcf - about the same as Cabot's in NE PA. This will be a major focus area for the natural gas business in 2017 and beyond at the expense of other shale plays in the country."

    That is pretty much it. If you will permit me a couple of builds on the general idea . . . .

    First, the Utica is generally bigger (in area) and thicker than the Marcellus, usually by a substantial amount.

    Second, they have barely begun to even explore the dry gas Utica play, but it certainly looks to be quite expansive. Shell has a couple of dry gas Utica wells in Tioga County, PA, which is the county immediately to the west of Bradford County, which is notable for being one of just a couple good counties for the NE PA dry gas Marcellus. Draw a diagonal line from there into the part of West Virginia south of Ohio and PA-- that will give you a rough idea of the length of the play. I don't think that they have it well delineated at all in the NW-SE direction.

    The Marcellus and Utica producers are going to eat alive every other producer that they can get to, with the possible exception of associated gas producers. It will become a game of how far can they ship it and still beat the lowest price that most other local producers can offer.

    It is a slight exaggeration to say it is going to be all about the Marcellus and Utica, but not that much of one. Marcellus/Utica takeaway capacity and the price of crude and NGLs are going to be the key things in the production story.

    If crude and NGL prices are decent, you will get a decent amount of associated production there. You won't get much head to head gas competition with the Marcellus and Utica: The economics are excellent and getting better. If they hadn't been oversupplied and transportation constrained, these guys would have been making a killing.

    But, think about this: Production didn't really even begin in the Marcellus until about 2009. By 2012, they were choking on the surplus gas-- and it isn't like the area didn't have any infrastructure. And those early wells were downright LOUSY compared to most of the wells now.
    Feb 2, 2016. 02:57 AM | 1 Like Like |Link to Comment
  • What Does BP's 'First Major Acquisition In 7 Years' In Lower 48 Onshore Signal?  [View article]
    @Gringo Starr

    Sandridge????

    Jesus, that would be a pretty harsh punishment even for the Deepwater Horizon.

    Aubrey McClendon and Tom Ward would be about the only two people on the planet stupid enough to buy a bunch of that worth less than nothing play.

    That is the charitable interpretation. Another interpretation would be that anything would work as a pretense to rip off shareholders.

    Tom Ward is some of the rankest trash on the planet. I'm sure BP doesn't want any association with that kind of filth.
    Jan 29, 2016. 12:49 AM | Likes Like |Link to Comment
  • SandRidge Energy Delisted - Should You Hold On To The Shares?  [View article]
    Keeping any Sandridge stock for any reason is throwing away money.

    The lottery at least provides a chance of making money. SD does not remotely provide the same odds: Its odds are far worse.

    It is really simple: Their assets totally stink and they owe a ton of money. They have squandered billions and billions of dollars of other people's money. These guys spent on capex something like 3x their funds from operations. Best part: They did that year, after, year, after year. Their wells stunk so bad it was almost hopeless when crude was at $100.

    Now? You could double the current prices and they still would probably lose money. Then consider the brine disposal issues.

    And you advise people to hold on to the stock?? Option my rear end.

    On the bright side, if I were a shareholder I would feel really good about my prospects for a suit against the members of the BOD. It was totally obvious in 2012 that their assets were garbage, yet they spent literally billions of dollars of shareholder and creditor money on 1000 plus wells, of which I expect less than 5% at the well level will ever recoup costs. It is just bloody insane. It was in 2012. It was in 2013. It was bat stuff crazy in 2014. Oh, and 2015?

    Who knows, maybe their are even some issues related to representations. Incidentally, I just happened to have this blurb handy from the earnings call the first quarter of 2013.

    "Operator

    You next question comes from the line of David Deckelbaum from KeyBanc. Please
    proceed.

    David Deckelbaum KeyBanc

    Good morning guys. I think that this question might be for David and guys as focus
    you talk a lot about high grade in today’s, you focus on this focus areas with 25
    rigs more or less throughout the remainder of the year, is there you have
    experienced some better results there, is there sort of a percentage wise number
    that you use on top of your base case type curve in that focus area?

    David Lawler

    No, David this is Dave Lawler we don’t make any kind of adjustment I think this is
    the key theme for us is that we did spend significant amount of money testing the
    play and we’ve found some very good areas and we have infrastructure there, so
    we are just going to continue to use our CapEx where we can get the greatest
    return like Tom was mentioning. So, we still wanted to go out and test the
    appraisal areas we are doing that, but where we are right now we just want to be
    as efficient as we can do with the CapEx.

    Tom Ward

    I think it is a little bit rare that a company uses the whole field across every well
    that’s been drilled to come up with a type curve. I think that’s fairly conservative in
    the business today where most companies use the better areas to drill within
    different plays and then look at that as being achievable for a type curve. So, I
    think we didn’t choose more conservative way to come up with a type curve for the
    Miss."

    Ohhh. I see Tom. You were merely choosing not to be more conservative . . . .

    What an utter batch of BS. I think anyone with any sense can see what went on here. I think it is utterly insane that this guy hasn't been sued out into the street.
    Jan 28, 2016. 10:20 PM | Likes Like |Link to Comment
  • SandRidge Energy: Water Disposal Controversy  [View article]
    @OKoil --

    Yep. I'm a pretty ardent environmentalist, but the thought of trying to treat brine makes me cringe: It would be an insane waste of resources instead of simply basically returning the stuff back to where it came from.

    To say that there would be no environmental benefit would be the understatement of the year.
    Jan 28, 2016. 10:03 PM | Likes Like |Link to Comment
  • SandRidge Energy: Water Disposal Controversy  [View article]
    This is a very interesting subject, great article by Richard, and I always enjoy and learn from OKoil's and Craig's comments.

    But, let's take a moment and consider how things got to where they are, why SD is in such dire straits, etc. Of course, one can wonder about the wisdom of selling Permian assets and offshore assets and using the proceeds to buy lots of Mississippian Lime leases. In fact, more land than could have been reasonably held even if any of it turned out to be worth a hoot, which fortunately it didn't so they could act like it was no big deal to allow their rights to expire under those leases.

    Really, those leases expiring were not a big deal. The decision to sell good assets to buy the leases and the actual purchase of those leases, now THAT was a big deal.

    There were other shrewd management moves along the way, including "Sandridge Commons," the glass staircase, and spending 2-3x as much in capex as their REVENUES were in multiple years.

    It would be remiss, however, not to discuss the well quality. After all, a big reason that people bought SD was because of the purported "value" of their reserves. How good their wells were.

    Let me turn it over to SD for their comments about their well type curves. This from the conference call for the first quarter of 2013:

    "Operator

    You next question comes from the line of David Deckelbaum from KeyBanc. Please
    proceed.

    David Deckelbaum KeyBanc

    Good morning guys. I think that this question might be for David and guys as focus
    you talk a lot about high grade in today’s, you focus on this focus areas with 25
    rigs more or less throughout the remainder of the year, is there you have
    experienced some better results there, is there sort of a percentage wise number
    that you use on top of your base case type curve in that focus area?

    David Lawler

    No, David this is Dave Lawler we don’t make any kind of adjustment I think this is
    the key theme for us is that we did spend significant amount of money testing the
    play and we’ve found some very good areas and we have infrastructure there, so
    we are just going to continue to use our CapEx where we can get the greatest
    return like Tom was mentioning. So, we still wanted to go out and test the
    appraisal areas we are doing that, but where we are right now we just want to be
    as efficient as we can do with the CapEx.

    Tom Ward

    I think it is a little bit rare that a company uses the whole field across every well
    that’s been drilled to come up with a type curve. I think that’s fairly conservative in
    the business today where most companies use the better areas to drill within
    different plays and then look at that as being achievable for a type curve. So, I
    think we didn’t choose more conservative way to come up with a type curve for the
    Miss."

    So, regarding their well type curve, Tom apparently thinks that using the "better areas to drill within different plays" and then looking at those results as "being achievable for a type curve"

    [I'm thinking that perhaps they did more than looked a the results--perhaps even telling people about their type curve]

    is just dandy and that doing this is simply not choosing a " more conservative way to come up with a type curve for the Miss."

    Personally, I would call Mr. Ward's characterization something a bit different.

    To my way of thinking, anyone who would deliberately do something like that is cesspool bottom slime.

    I hope the SD shareholders clean him and the BOD that was in cahoots with him out for every cent they have.
    Jan 28, 2016. 10:02 PM | Likes Like |Link to Comment
  • Sharing My Thoughts On Peabody Energy's Proposed 2018 Debt Exchange  [View article]
    @Courage & Conviction Investing --

    A very good and refreshing article. I think a lot of people are getting similar lessons with other commodity company securities these days: Too much supply can be totally brutal. It does take courage to write an article like this.

    I hope you get some pop on short covering: You definitely put a lot of quality effort into research and analysis.

    Natural gas closed at $2.226. It is January 28th. We just had a big blizzard, which may make it an even better time to short . . . . . Naaahhh. No one will believe me . . . . .
    Jan 28, 2016. 06:31 PM | Likes Like |Link to Comment
  • SandRidge - Abandon All Hope, Ye Who Enter Here  [View article]
    @The O--

    "Do you agree SDOC now a strong buy[?]"

    "Now is the time to buy SDOC."

    If you had made only one of those two comments, I could have believed you were trying to joke, but simply not very skilled at comedy.

    But for TWO comments like that, I would have to say that SA may have a new champion for exhibiting the "good judgement" to use your mouth to pick up used gum from a gas station bathroom floor and proceed to chew it.

    Oh wait. I meant for having the "good judgment" to even consider buying Sandridge stock. I get those two confused because they require a similar amount of judgement.

    Let me explain Sandridge's business plan. They plan to make noise about trying to develop assets elsewhere besides the Mississippian Lime so that the BOD and senior management will have an excuse to keep paying themselves as much as they possibly can of the cash that they have on hand so that they can try to run through it all so that not a single creditor or equity interest owner gets a darn thing other than the "satisfaction" of having paid the salaries for the most incompetent BOD and senior management group I have ever seen anywhere in any industry.

    We really shouldn't neglect mentioning Tom Ward, since he really had a huge hand in fashioning Sandridge in his own image.

    Hey Sandridge BOD, do you regret spending $100 million on remodeling, curving halls, and glass staircases? Probably not smart enough to. How about the $90 million you allowed Tom Ward to walk off with for his efforts in selling every decent asset the company had and buying more Mississippian Lime leases than could ever have been held even if you could make money on the wells, which, of course, you cannot.

    And all that while the ground was shaking beneath your feet: How did you ever keep your concentration to work so effectively????

    Well, The O, I do appreciate you making everyone aware of one fact: There is a reason the government takes 15% out of everyone's paycheck. The government is always going to wind up having to take care of people like you who wouldn't stand the slightest chance of doing anything except losing all their money if they tried to invest it.

    You need to be smarter with your money and limit the money you spend on "investments" to what they take out of your check for Social Security. I'm pretty darn sure that would be best.
    Jan 28, 2016. 05:02 PM | 1 Like Like |Link to Comment
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