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  • Bakken Update: EOG Well Pad Produces Revenue Over $200 Million In 2.5 Years  [View article]
    Excellent article, Mike. You have to like those rates, and you have to also think that if they can be replicated, the percentage recoveries in the whole of the Bakken will start increasing as well.

    In the short term that will put some incremental pressure on prices, but in the long term it would greatly improve well economics.
    Jun 30, 2015. 09:55 AM | 3 Likes Like |Link to Comment
  • 3 Reasons Why Cobalt International Energy Will Get Better  [View article]
    Of course, since they don't have earnings or production right now, earnings growth should be very high (it is that or go out of business). What I have been trying to do is to figure out EBITDA five years or so out--and that isn't easy. (I use EBITDA as a common metric although operating cash flow (cash flow before capex) might be the better measure)
    May 29, 2015. 02:46 PM | Likes Like |Link to Comment
  • Bakken Update: Diamondback Energy's Spraberry Results Impress At $60/Bbl Oil  [View article]
    Good piece, Mike. My view on oil is that it is going to be hard pressed to improve much until the world sees an economic rebound--and predicting that is tough. So long as we have governments focusing on wars and and economic redistribution rather than on economic growth, a worldwide rebound will be delayed.

    But, even idiot governments (if that phrase isn't internally redundant) can suppress economic growth for only so long, and once it happens, the demand for gasoline and diesel is going to shoot up in the less-developed world and we will see much higher prices.

    Or to put it another way--I think in the long-term oil is a place to be, but the short and medium term might continue to be painful. Buying higher quality names at reasonable prices is probably the best way to mitigate that pain.
    May 28, 2015. 09:58 AM | 2 Likes Like |Link to Comment
  • Is It Time To Buy Big Oil?  [View article]
    Mr. Schaefer:

    I share your concern about the market (and by the way, I don't believe the statistics coming out of Washington, much less Beijing), but I wonder about both BP and XOM. Both have a lot of Russian exposure and I worry about how safe those investments are in the current geopolitical environment.

    As for Total, it has very interesting assets, but it reports to the French government, and its strategy does not always seem to be driven by a long-term focus on return on investment.

    I think that some of the names in your next tier down might actually be safer.
    May 15, 2015. 09:18 AM | 3 Likes Like |Link to Comment
  • Cobalt International - This Under-Covered Energy Stock Deserves A Closer Look  [View article]
    Good article but keep in mind, under the PSC for the block Cameia is on, the Angolan government gets to keep much/most of the upside from price increases. The real leverage on price comes from the GOM fields, and some of them look fairly promising already.
    Apr 29, 2015. 04:20 PM | Likes Like |Link to Comment
  • A Tale Of 2 Banks: Pondering Wells Fargo And Bank Of America  [View article]
    This was a very well done article and I'd look forward to your comments on Citi as well.
    Apr 24, 2015. 08:49 AM | 2 Likes Like |Link to Comment
  • Bakken Update: Emerald Payback Times Point To A Long Winter In The Bakken  [View article]

    Another good article. I'll note for the folks here who like the company that in a declining price environment it is generally the marginal commodity producers in the most marginal areas (and given the price differentials the Bakken is more marginal than, say, the Eagle Ford generally) that fall the farthest.

    If prices go up, those stocks, however, generally outperform the others because they have more operational leverage. I own few Bakken names these days, but if I thought that oil was heading back to $100, I'd buy a basket of the more marginal Bakken names.

    Unfortunately, I have no idea where prices are heading, though I think we probably haven't seen the end to the decline yet (and I am thus short USO).

    In the long term, buying the best producers--the ones with the best operations and acreage--should be the most profitable strategy for those of us who can't accurately time oil price swings. And Mike is right. EOX is not currently one of those names. Perhaps it will make it there, but right now it is not. If prices head back to $100, though, you will make excellent returns in the stock and I wish you well.

    Nov 13, 2014. 09:12 AM | 1 Like Like |Link to Comment
  • We Warned You Early About This Correction, What Are We Doing Now?  [View article]
    Excellent column once again. Jeep
    Oct 17, 2014. 09:00 AM | 1 Like Like |Link to Comment
  • Bakken Update: Analysts Have This Recent Permian IPO Growing 88% In 2015  [View article]
    Mike: Very nice work. You are quite correct in concluding that the Permian valuations are driven by the basin's very promising geology. Question, though. What happens if oil prices keep dropping (driven by a spreading European recession, perhaps)? Thanks. Jeep
    Sep 10, 2014. 08:31 AM | 2 Likes Like |Link to Comment
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple  [View article]
    I owned Mariner back then. Mariner was mainly a shallow water driller, but it also had an operation in the Permian with vertical wells that had economics the same as PXD's. Terrific returns--and no one cared. Mariner eventually got bought by APA, which is where APA got a lot of its Permian position from.
    Aug 11, 2014. 09:21 AM | 2 Likes Like |Link to Comment
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple  [View article]
    bankstocks: Not kidding at all. Take a look at their six most recent wells. Two with 30-day IP's of 17 mmcfe/d; six with 30 day IP's averaging over 25 mmcfe/d. Given the decline they have seen on their other high flowing wells, I figure that payback is something like 3-4 months at the approximate $6.00 mcfe they have been receiving.

    It is, admittedly, a different kind of play than Lynden. MRD is in a rapid growth phase, which is why it has the high EBITDA multiple. Lynden, by contrast, is an undiscovered asset play. I like them both. Lynden probably has more upside, but if MRD keeps hitting wells with 30 day IPs of 15-25 mmcfe/d it is going to grow EBITDA at very fast rates, which means the multiple will be shrinking rapidly.
    Aug 11, 2014. 09:18 AM | 2 Likes Like |Link to Comment
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple  [View article]
    bankstocks: I like E&P's to provide 180/270/360 type of data. One that does is MRD. If you haven't looked at it already, take a look. It's only wet gas in Louisiana--but right now they are announcing wells that are among the best in North America. As you point out, the Permian is great because of the stacked pay, but MRD has some stacked pay (albeit, not as many zones yet), with some of the zones containing that lovely word "overpressured."

    By the way, remember when the Permian was the "largest non-economic oil field in the world?" One has to like horizontal wells, fracking, and most of all $100 oil.
    Aug 9, 2014. 08:12 PM | 4 Likes Like |Link to Comment
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple  [View article]
    bankstocks: Thanks. That is very helpful. If you know, what kind of spacing is working in these areas? Jeep
    Aug 8, 2014. 07:55 AM | 1 Like Like |Link to Comment
  • Lynden Energy - Unknown Permian Basin Pure Play Could Triple  [View article]

    I've held Lynden stock for a few years now, and found that to be a thoughtful article. One question I have is growth. Putting aside the Mitchell Ranch acreage (which I think you treat in an appropriate manner) how much more drilling (downspacing?) can they do on they Midland acres? My impression is that they still have some room to run there, but is there enough room to justify the higher EBITDA multiples that some of the others have? I know some of them have a many-year inventory, which means they can grow at high multiples for a bunch of years, but am unsure about Lynden's.


    Aug 2, 2014. 07:26 PM | 3 Likes Like |Link to Comment
  • My Top Junior Oil Stock In The Permian Basin 'Tight' Oil Play  [View article]
    bankstocks: Thanks for the update. Personally, I've just been holding my position in the assumption that if the acreage proves to be good we will make a lot of money, and if it mixed we'll always be able to get out at a price somewhere near here.
    Jul 27, 2014. 02:18 PM | 1 Like Like |Link to Comment