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rmgillis

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  • Awilco Drilling Is Still The World's Most Undervalued Company [View article]
    Tony,

    Awilco stated that this year's CapEx set aside would be $30M. The decision to set aside $45M for state-of-the-art Blow out preventers was announced late in 2013. The required quinquennial SP Surveys scheduled for 2015-2016 are budgeted at $40M. It's hard to predict what the next SPS in 2020 would be for the two rigs. But assuming another $20M each with 5 years to set aside the cash, it seems reasonable to guess that CapEx set asides will be at least $22M less than the $30M annual rate AWilco is putting aside this year. Based on the stated dividend policy, this savings is available for dividends. Actual day rates and operating expenses,taxes, etc will also have a material effect of course.

    Most commenters have not recognized this change in finances once the yard stays are behind us. (Though several others have recognized and mentioned this. ) AWilco has not been explicit on what plans are for the cash buffer in the future and whether the $25M new cash after the refinance has been lumped into the "buffer". Nevertheless, if mgmt is also successful in reducing 2015 taxes to approximately 15% and day rates remain above $350K, 2016 dividends should increase significantly over today's.
    Oct 5 02:06 AM | Likes Like |Link to Comment
  • Awilco Drilling Is Still The World's Most Undervalued Company [View article]
    Tony, you make a very good point. As you may know Northern Offshore had contracted to buy the two rigs from Transocean for $750M before they were extensively refurbished. Awilco bought them for under $200M and spent $100M in a major refurb and upgrading project. Buying today actually gives one leverage based on a conservative estimate of the true enterprise value.

    We don't know when circumstances such as rising oil prices, UK incentives for North Sea work, general increase in optimism for offshore drilling, Awilco showing up in a free stock screener like yahoo (the average ultra hi-yield chasing investor still cannot find AWilco using a screener!-- many choose to prop up the doomed WHX or GNI !). Many find it tough to wait out for a stock to return to favor, but being paid 25% + per year makes it a lot easier. (trailing dividend is $4.55 so we are are at 27% at today's price).

    The post yardwork dividend will include savings from the current $30M/yr Capex down to the new set aside for the the 2020 SPS-- that might be $8M / year based on the $40M for the upcoming 2015 SPS not including BOP's.
    Oct 3 12:06 PM | 1 Like Like |Link to Comment
  • Esperion Therapeutics: Another IPO After Pfizer Abandons The Only Drug In Its Pipeline [View article]
    ESPR is at $27 today.

    From a Forbes article:

    "Yesterday Esperion announced positive top line results of a phase 2b trial evaluating the safety and efficacy of ETC-1002 alone and in combination with ezetimibe with ezetimibe alone in patients with high cholesterol levels with or without statin intolerance. The results (see below) show that ETC-1002 effectively lowers LDL by itself and in combination with ezetimibe. Perhaps even more intriguing, the reduction in inflammation, as measured by hsCRP, raises the hope of additional benefits, though of course at this point no one can say for sure what this may mean. The company also said that the drug was safe and well tolerated in the study."
    Oct 2 06:00 PM | Likes Like |Link to Comment
  • Tonix Is A Buy On Endpoint Circumstances [View article]
    George Rho has a current article on ACAD that might fill the bill.

    http://seekingalpha.co...
    Oct 2 05:18 PM | 1 Like Like |Link to Comment
  • Tonix Is A Buy On Endpoint Circumstances [View article]
    I keep thinking that it might be very beneficial to dementia sufferers at many stages for those who do not sleep well. Many Alzheimer's patients get little restorative sleep and stay awake much of the night and constantly fall asleep in a chair during the day. Alzheimer researchers such as Dr Rudy Tanzi have stressed the importance of sleep for the brain to maintain itself.

    It seems clear in my father's case that his insomnia has coincided with an accelerated decline. The off label use of depakote and antipsychotics for the management of dementia patients includes night wanderers who make it difficult for the skeleton night shift at memory care facilities. TNX102 might be obviate the need for many patients on these otherwise unnecessary and dangerous medications. If nothing else it could relieve patients agonizing insomnia.
    Oct 1 02:16 AM | 1 Like Like |Link to Comment
  • Update: Awilco Earnings [View article]
    Last quarter, Awilco's effective average rate of tax on profit was 21.79% per their quarterly presentation.
    Sep 18 12:12 PM | Likes Like |Link to Comment
  • Awilco Drilling Is Still The World's Most Undervalued Company [View article]
    It's the Q2 Dividend ending June 30, 2014 that is being paid in Q3 2014 on September 19, 2014. The dividend was announced just prior to the mid-morning quarterly presentation and afternoon conference call on August 13, 2014. In the US, you may see the dividend amount sometime after midnight when the charts are posted on the website pre-market on the morning of the presentation from Oslo.

    The invitation announcing the quarterly meeting comes about 6 days before the meeting, so expect that meeting announcement the about a week into November.
    Sep 12 04:58 PM | 1 Like Like |Link to Comment
  • Update: Awilco Earnings [View article]
    Awilco faced a couple of external challenges last quarter (2014Q2). Their tax rate was retroactively raised to over 20% (covering Apr2014 forward) because of changes in UK bareboat charter tax rules. Previously they had been able to keep income taxes 8-10% each quarter. Earlier in the year, social services taxes for offshore workers were imposed, raising Operating expenses from ~80k per day to ~95K per day.

    The 9% balloon note debt to Transocean was paid off early. This incurred a 2.9M USD interest charge for early payment + the actual ~2M USD quarterly interest. The new $125M bond is 6.75% - 7.25% payable semi-annually starting in Oct. This new senior debt has ~ the same gross interest per annum - a definite positive for Awilco. The extra cash is available to add to the future capex fund ($45M for the Blow out protectors+ $40M total for the two SPS inspections during the 2016 yard stays). Currently $15M is being set aside for the BOPs per annum. That quarterly expense will be available for dividends once the BOP's are installed.

    Current Q3 gross contract revenue will be up Q/Q ~$12M as the day rates on both rigs just went up substantially--from $360K and $315K/day to $385K and $442.5k/day and will remain high throughout 2014-2015 ($385K & $387.5K/day). That's a potential 40c additional per share gross income if efficiency remains in the high 90%s --as is typical the past couple of years.

    Notable Changes Q1 to Q2 Income statements:
    Revenues +$3.5M (+6%) 62.7M to 66.3M (Q3 up another $10-12M)
    Opex+$2.8M (+20%) $14.4M to $17.2M (Q3 should stay around $17M)
    G&A +$2.0M (+50%) $4.0M to $6.0M (Q3 probably down to $4M, depends on value of incentive stock options)
    Op Profit - $1.7M (-5%) $39.7M to $38.M (Q3 should be up $10-14M)
    Interest up $2.4M (+95%) $2.5M to $4.9M (Q3 back to ~ $2.3M)
    Tax $2.75M to $7.2M (7.4% vs 21.8%) Tax rate should be down to ~15% by Q4
    Net Profit 34.8M to 25.9M -25%

    Possible Q3 net Profit:

    Start with Q2 pretax profit ($33.1M per AWilco 2014 Q2 financial report)

    q2 Net Profit /------adjustments -------------/Q3 Net Profit / Per share Net Prof
    ----------------------...
    $33M (+10M rev 22%Tax)- ===============> $34M => $1.12
    $33M (+$12M rev ---------------------- --22%Tax) => $35M => $1.17
    $33M (+$12M rev ----------- -$2M Int, 22%Tax) => $37M => $1.22
    $33M (+$12M rev +$2M g&A -$2M Int, 22%Tax) => $49M => $1.275
    $33M (+$12M rev +$2M g&A -$2M Int, 16%Tax) => $49M => $1.37

    $33M (+$10M rev 16%Tax)- ==============> $36M => $1.20 Later Qs
    $33M (+$10M rev +$2M g&A -$2M Int, 16%Tax) => $47M => $1.31 Later Qs

    I see no likely decrease in Dividend for Q3. For the following 4 quarters, the Revenue from contracts should be about $5M less than Q3 because the $442.5K day rate drops to $387.5K/day.

    note: Short quarters will lose ~$775K per missing day day (Q1=90, Q2=91, Q3&4=92 days) that's 3c per share but they also miss expenses so it's about 1.6c a day net effect.

    ps
    Information is from Quarterly Financials and quarterly presentations -- with rounded numbers-- at Awilcodrilling.com. Projected revenues are based on current contracted day rates at current efficiencies based on the actual days per quarter.
    Sep 2 06:34 PM | 7 Likes Like |Link to Comment
  • Update: Awilco Earnings [View article]
    There are Vanguard clients at the InvestorVillage board who are AWLCF investors and they do indeed get their massive dividends.
    Aug 29 04:19 PM | 1 Like Like |Link to Comment
  • Update: Awilco Earnings [View article]
    There is no real news, but the price drifted down a small amount before 10K shares were traded in Norway overnight at 141.5-142NOK, the price recovered to 147NOK there at close, down 4NOK or about 65c US. USD is 6.18NOK currently.

    Firday's volume in Norway was anemic at 18.4K shares, and it was very low volume until the relatively large trade occurred at 0634 EDT about midway through the session. Final volume there was nearly 80K shares - avg is about 30K shares.

    With the refinance of the balloon note, the drop in tax rate to 15% (management couldn't arrange for any tax savings for the retroactive tax increase for last quarter), expected contract revenues increasing from this quarter's record $57M to $72M followed by $70M, $69M (short 90 day quarter) and $70M (assuming pro forma uptimes) until the yard stays 5 quarters out, I'd have to say it's a buying opportunity this morning.
    Aug 25 11:23 AM | 3 Likes Like |Link to Comment
  • MannKind: Let It Dip A Bit More, Then Cover/Buy [View article]
    http://bit.ly/WRNKot

    They have changed the disclaimer recently but it still makes many references to fiction in its website. The link above is from the internet archive-- I picked a date a random from last year and the disclaimer excerpt I mentioned matched verbatim.

    Sierra is well known for just throwing darts and making sometime plausible statements trying to garner clicks. They are every bit as accurate as the average psychic who makes the new year's predictions in the Enquirer.

    In other words, there is no new information to be had reading Sierra Equity Review and they have nothing to lose by saying anything.
    Aug 1 03:42 PM | 5 Likes Like |Link to Comment
  • MannKind: Let It Dip A Bit More, Then Cover/Buy [View article]
    OverSouled,

    The bulk of your our reply is well-reasoned but how did you decide to throw in a "last but not least" reference to Sierra Equity Review?

    As a hint as to the value of Sierra's predictions, read the first few sentences of their own disclaimer:

    "This website is for fictional and entertainment purposes only! Sierra World Equity Review and it’s publisher, do not accept payment to feature or recommend any stock. Nobody knows about our stock picks before they are published live on the website. ...."
    Jul 29 12:07 PM | 1 Like Like |Link to Comment
  • Whiting's Production Estimates Lead To $9.90 Fair Value For Trust II, 24% Downside [View article]
    MIchael, interesting take on WHZ. I appreciate the amount of work you put into it. I did see some things I tend to disagree with.

    One important number in your 3 scenarios seems unreasonable to me. The lease operating costs have not proven to be significantly correlated to oil prices. I've looked at the expenses at both of Whiting's trusts for lease operation as a % of total sales and though for the 1st two quarters of 2014, 38% is "correct", over the life of WHX and WHZ this percentage varies from just over 20% to well over 50%.


    The expenses vary with production and other factors, but the price of oil being high actually has a negative correlation. When oil was 20%+ higher back in 2008 WHX showed the lowest percentage lease operating costs-- in the low 20s. This skews both your 10% over and 10% under scenarios by a very substantial amount.

    You also use today's price for your 10% over scenario instead of having it be the nominal case. Using the industry long-range 'forecasts' helps your case a lot, but it's not everyone's opinion that oil can only go down in price. So it's a bit disingenuous to use current prices to be your unlikely best-case straw-man scenario.

    If, instead we make the assumption that lease operating costs are variable but are linked to things like number of wells and production and that development work is based on what it takes to work over wells etc. we may come to different conclusions. Let's stipulate for now that after the fact they will appear to be a fixed cost that you calculate an average for.

    If you start with this premise, and using WHX as a guide, we see that a 10% increase in the price of oil equates to approximately a 20% increase in distributions and that a 10% decrease leads to a 20% decrease in distributions (with constant production). In fact, a 20% change would result in the same 2:1 leverage in the distributions to +/- 40%.

    Meanwhile, your model tells a very differnt story--that WHZ would pay 10% less in the low scenario only 8% more in the high scenario than what it gets at $79/bbl. And these effects are mostly based on the production changes you've allowed. The price of oil actually has a leveraged affect on WHZ's payouts.

    You can import all the numbers from Whitingoil.com on both WHX and WHZ since inception and graph all the relevant production and sales figures fairly easily, as I did tonight. It's instructive, but the case for the 8.4 % annual decline does not become obvious-- in fact, that is why WHX is finishing 3 years early (since it doesn't have WHZ's modified termination clause). Surprisingly, the gas decline actually seems greater than the oil decline and with the BOE equivalency of 6:1 mandated [despite the actual 18:1-40:1 price ratios we have seen in the past 6-7 years], this can skew the apparent productiuon when you look at the BOE decline. That was significant for WHX with its fixed BOE target but unless WHZ falters badly it will not affect the ultimate payout of WHZ. Super low gas prices really cost WHX per BOE-- $12 of $2/MCF gas displacing a BBL of oil at $80 per BBL. There is no BOE limit on WHZ as long as it stays ahead of initial predictions, which WHX easily did.

    Nevertheless, WHZ is still a very speculative play, but is now a lot more interesting at $11.50 a share, apparently thanks to your well-written article. WHZ can be a chore at tax time despite not being a K-1 entity like SDR, SDT & PER. It has a it's own booklet explaining it all. You do get your 15% depletion and other considerations for your trouble.

    ~~~~~

    Obligatory pedantic note :) :

    By the way, and despite the informational footnote, the natural gas liquids are not a major reason that the oil price is much lower for WHZ and WHX. There are geographical price spreads that dwarf the small amount of lower-priced NGLs included in WHZ's liquid petroleum mix. The NGL total is just over 3% of the mix, so even at price of $0 they can't drop it more than about $3. Indeed NGL prices have ranged from mid $20's to higher than the price of oil at various times over the past few years.

    PS I currently have no Position in any royalty trust at present, but have had substantial holding WHZ, SDR PER and CHKR in the past. It became hard to consider them after investing heavily into AWLCF. Anyway, we already have substantial Overriding royalties in the Barnett Shale and elsewhere, courtesy of my late geologist father-in-law.
    Jun 4 03:27 AM | 2 Likes Like |Link to Comment
  • GCVRZ Forum Archive  [View instapost]
    Good point!
    Apr 17 11:21 AM | Likes Like |Link to Comment
  • GCVRZ Forum Archive  [View instapost]
    What sumikuboanr is saying about the non-Major Markets is that we may be missing out on the second dosing of the earlier patients in the non-major markets.

    Since the Major Markets sales begin the first full quarter after the initial sale in that market, we won't be getting any second-dose sales in those markets counting toward Sales Milestone #1 ($400MM).

    On the other hand, non-major markets had the possibility of 4 quarters of sales, with a large percentage of those pre-sale period patients getting their second-year follow-up dose (albeit at somewhat lower dollar amount) thus losing a 4-quarter stream of new patients at full price and a built-in stream of the patients from the previous 4 quarters. Potentially, if adoption ramps up somewhat the second year this could almost double the revenue that counts toward Sales Milestone #1. (SM1)

    Of course, there could be a flood of patients early on who have been waiting for approval and the second year may have fewer new patients, or sales could pick up steam as word spreads among MS patients- many unknowns. This could be good for total sales as long as there is a steady stream of new Lemtrada patients the next year- enough to make up the 20% or so lower revenue for dose #2 and those who for whatever reason don't get dose #2.

    So, any patients starting in a non-major market from April 1 2014 to late March 2015 will count as about .8 of a new patient the next year, provided they do get that second dose about 1 year later. This is revenue denied to the 5 Major Markets.

    Example: Lets say, in the Grand Duchy of Fenwick, 100 patients receive Lemtrada before March 31, 2015 at $75000 per patient and 90 of them receive does number two within twelve months. (10 wait over 12 months or can't/won't take dose #2)

    If those 90 patients got dose#2 at $60,000 each and 61 new patients at $75000 each were treated with Lemtrada from April 1, 2015 to March 31, 2016, that would generate ~$10 million toward SM1.
    If, instead, patients had to wait until April 2015 before Lemtrada was available, and ~133 patients were treated during the next 4 quarters, this would also result in $10 Million toward SM1.

    Thus, if hypothetical pent-up demand in a non-major market doesn't exceed about 50% of these erstwhile second-year new patients, then it would be better for GCVRZ holders if the drug were available now in each non-major market. (based on 25% lower revenue and a 90% retention rate for dose#2)
    If however, second year revenues are less than half the first years revenue, a just-in-time start could be better.

    Since some early adopters may be delayed by their doctors the just-in-time scenario is probably not the best. There are also those who will become too ill after waiting an extra year.
    Apr 16 04:48 PM | Likes Like |Link to Comment
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