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gausmus

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  • SandRidge Energy: Should Tom Ward Go? [View article]
    Tom Ward built the company, and for that he should be recognized and paid. Both things have occurred in full measure. But - let's look forward, not back.

    How to build a company is not at issue here. How to make it reflect full value is. By the only objective measure that matters (the market), SD's management is wanting.
    Nov 14 01:40 PM | Likes Like |Link to Comment
  • SandRidge Energy: Should Tom Ward Go? [View article]
    Assets all over the place. Good ones. But Management can't figure out out to make the development budget fit inside the properties ability to throw cash. Management brags about having 12-15 years of drill sites under lease in the Mississippian. SO - shareholders get to carry that stone around for 15 years before they see cash? Come on. What business has 15 years of raw materials parked out the back door? And management brags about this? SD - Rightsize your asset base. In a thoughtful, transparent way.

    Then there's production property purchase in the Gulf. How is that accretive?

    Finally, there's the communication problem you mention. The response to the TPG-Axon letter was a classic. Let me paraphrase: "We (SD) disagree with TPG's assessment of the situation. We'll talk to them. That's all for now, shareholders."

    Tom Ward and Co. need to figure out that the point of a business is to make the owners richer. Not to drill every well you can. Not to snarf up every lease you can. Not to grab every drop of oil you can. Make it cashflow. Get your credit rating back. Cull your assets.

    It's so darn simple. And some management team is gonna do it, either Tom Ward et al or the next group. But it will happen. Meanwhile, shareholders will suffer.
    Nov 13 03:08 PM | 8 Likes Like |Link to Comment
  • Haynesville Shale Production - 2013 Will Be The Year It Finally Starts Dropping [View article]
    devon shire: Simmons-International in Houston, a boutique buy-side shop that specializes in energy has done some really nice work on Hayesville and other shale plays. Talk to them.
    Oct 29 01:27 PM | Likes Like |Link to Comment
  • Haynesville Shale Production - 2013 Will Be The Year It Finally Starts Dropping [View article]
    A third possibility (well, actuality). the industry has learned to accelerate the spud to completion cycle, increasing the # of wells per active rig,

    and,

    The industry has learned to complete the wells far more effectively than the orignal horizontal wells. Average Initial potentials and average ultimate recovery (estimated) are up.

    Both of these incremental improvements have done much to support production volumes.
    Oct 29 12:32 PM | 5 Likes Like |Link to Comment
  • Five suitors are interested in acquiring one or both of ThyssenKrupp's steel mills in Brazil and the U.S. following the first round of bidding for the assets, Die Welt reports. ArcelorMittal (MT) is interested in the steel finishing plant in Alabama, while other potential buyers include Brazil's Vale (VALE), South Korea's Posco (PKX) and Japan's JFE Steel. (previous[View news story]
    Why would anyone build a new mill when such a nice, gently used one is available at a discount? New build = wealth destruction right now.
    Oct 10 11:00 AM | Likes Like |Link to Comment
  • What To Expect When Cliff Natural Resources Reports Earnings [View article]
    Revenue = Price x Quantity. U.S. steel production has been turning in 20 month lows the last few weeks, volumetrically speaking. Low Q. CLF has to be taking it on the chin as US producers down opt in their mine partnership agreements. Agree that all the stimulus $ will get to CLF eventually - but not anytime soon. Internationally, BHP is laying off.

    Point is, it's all timing on these commodity stocks. Think you are a little early.
    Oct 10 07:57 AM | 1 Like Like |Link to Comment
  • ArcelorMittal: A Steel Maker With Solid Growth Potential And A 4.35% Dividend [View article]
    Two questions:

    1). Is the dividend sustainable? X, MT, AKS have been on the "trail of tears" for some time now. Eurpope's travails are a particularly heavy weight on MT's stock price/earnings power.

    2) what are the intentions of the Mittal family? The Arcelor/Mittal Steel merger can be understood as a liquidity event for the family. What's their next move?

    I have no idea what the answers are. But the questions need answering before investing.
    Oct 9 12:54 PM | 2 Likes Like |Link to Comment
  • ThyssenKrupp (TYEKF.PK) is considering selling its two-year old $5B high-tech steel plant in Alabama and its $6.8B facility in Brazil after a strategy to transport slabs from the latter facility for processing into high-grade sheets in the U.S. factory led to massive losses. Those officially or unofficially interested in the Alabama plant include Nucor (NUE), U.S. Steel (X) and ArcelorMittal (MT). [View news story]
    With U.S. production at a 20 month low, capacity has to exit.
    Oct 2 06:54 AM | Likes Like |Link to Comment
  • Siemens (SI), GE and start-up backed by Bill Gates are among those developing different methods for storing surplus energy. It's not just about batteries, with one technique using excess electricity to pump compressed air into caves and then releasing that air to generate power when needed. The storage is needed to cope with the vagaries of solar and wind energy. [View news story]
    In re: JohnInMA's comment. You are right as to the opportunity cost and the marginal cost of operating a generation facility. There are times when the capacity to produce power (or shed load) is very valuable and thermal efficiency doesn't matter. That said, the project still has problems from two perspectives.

    1) The clock hours in a year when capacity is valuable are few in number. These numbers are publicly available from MISO, PJM, ERCOT, etc. So, the project must make sense vs. other alternatives (load shedding, predominantly). New gas fired capacity is maybe $1200/kW, which is a tough price target for compressed air facilities. Load shedding is even cheaper than that, and we've only scratched the surface of this resource in the U.S.

    2) Even if you can get past 1), the project has to overcome the triviality issue, ie, a 1 or 2 MW capacity project is too small to have any meaningful change in the capacity/demand balance at the ISO or utility level. And that's what matters.

    There's another test out there that all should consider. Investor owned utilities have a very low cost of capital and every incentive to invest (that's how they earn, after all). If the IOU's could dream up a scenario that showed benefit to ratepayers, these things would pop out of the ground like toadstools after a summer rain. They don't. That speaks to the (non) viability of this technology very loudly.

    Those outside the industry can hope, dream, imagine. Investors (that's what Seeking Alpha is about, right?) will take a pass absent subsidies pointed at the technology.
    Sep 5 08:47 AM | Likes Like |Link to Comment
  • Siemens (SI), GE and start-up backed by Bill Gates are among those developing different methods for storing surplus energy. It's not just about batteries, with one technique using excess electricity to pump compressed air into caves and then releasing that air to generate power when needed. The storage is needed to cope with the vagaries of solar and wind energy. [View news story]
    Funny how having lots of money will make you forget the first and second laws of thermodynamics. These schemes are expensive and trivial, when held next to grid demands. But Siemens will cheerfully take your money, Bill.
    Aug 28 10:02 AM | 2 Likes Like |Link to Comment
  • Kinder Morgan - Pipe Dream Valuations [View article]
    Have you done comparatives on distributable cash flow to unit holders? The clientele that owns these things are "yield vampires", ie, keenly interested in yield vs. other investment attributes. Disclosure - I'm a yield vampire as well... Anyway, it may help the discussion on the relative merits of MLP's.
    Aug 9 12:43 PM | 2 Likes Like |Link to Comment
  • Cliffs Natural Resources' Dividend Is Safe, But Risks Remain [View article]
    Something you may want to consider/keep your eye on: USX and MT have their US labor contracts under negotiation this year. Per the recent Wall Street Journal Article, ArcelorMittal has asked for a 36% reduction in labor costs per ton.

    Just a wild guess: The Steelworkers have a different idea entirely. IF MT sticks to their guns (a big IF), the reasonable investor would expect a strike. I haven't done the math on what this means to CLF's sales, but it has to be substantial. MT has to be their biggest North American customer.
    Jul 24 03:18 PM | 1 Like Like |Link to Comment
  • Why Airline Profits Will Fatten Over The Next Decade [View article]
    Work in it a while. No reinvestment. Overcapacity. No returns. No bonuses. You'll whistle a different tune.
    Jul 23 11:53 AM | Likes Like |Link to Comment
  • Why Airline Profits Will Fatten Over The Next Decade [View article]
    I worked in the steel industry, another commodity biz (yes, airplane seat miles are a commodity). In 2003-2004, many of the "it's a new era" thoughts were expressed just as you have: Ogliopolistic behavior, tighter capacity demand balance, better deal with the unions, etc.

    Guess what? Some profits, followed by new entrants, followed by upstream capitalization of profits, down stream capitalization of risks. AcrcelorMittal stock was $102/SH. Now it's $15/SH.

    These industries are just structurally bad businesses - no way to find a niche and own it.
    Jul 21 10:05 AM | 1 Like Like |Link to Comment
  • ECRI Believes Recession Has Begun [View instapost]
    Two signs that seem to support your recession call are national electricity sales volumes and mogas consumption. I like to look at both of these as their usage is ubiquitous and there are no real alternatives that are practical. They are a pretty clean look at economic activity with very little lag. In both instances, the YOY volumetric consumption is lower in 2012 than 2011. The former by 2.5-3%, the latter by about 5%.
    Jul 11 01:12 PM | Likes Like |Link to Comment
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