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Bob de'Long

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  • Don't Look To Chesapeake Energy For Your Predictions On Natural Gas Prices [View article]
    It isn’t just that McClendon is a terrible predictor of natural gas prices. Aubrey McClendon is just plain deceitful. For example: In his various plays, he reports only “notable” wells. He drills 24 wells and reports only the best three.

    I’ve just read CHK’s quarterly release and the accompanying presentation. Same old deceit. Apparently, the five new board members are just five more crooks.

    Aubrey McClendon will cause more regulation. People who cannot regulate themselves need to be regulated by people like Charles Schumer. That’s what it will come to.
    Nov 1 05:46 PM | 4 Likes Like |Link to Comment
  • Natural Gas: The Tricky Craft Of Counting Drilling Rigs - Part I [View article]
    Good article.

    Productivity Revolution: Listening to the CEOs and COOs, it quite clear that one drilling rig in November 2012 can develop more gas or oil than one rig just a year ago. Here is a preliminary list:

    More petroleum production developed per rig day due to:
    1. pad drilling,

    2. better rigs (new rigs coming on line, least productive ones being stacked),

    3. longer laterals (less vertical hole per productive foot of horizontal),

    4. improved geo steering and better use of seismic data, and

    5. faster penetration (feet of hole per drilling day) – mostly due to experience in zone and hard work by drilling engineers.

    And as Mr. Zeits mentioned last week, firms are drilling sweet spots.
    Oct 26 08:50 PM | 4 Likes Like |Link to Comment
  • Bakken Update: Exxon's Purchase Of Denbury's Acreage Is A Win-Win Situation [View article]
    Goos article.

    I'm going to be more critical of Denbury (DNR). DNR's managment was never interest in their great Bakken acreage. When they acquired it, Denbury treated it like a unwanted stepchild.

    DNR is a one-trick pony; it does CO2 pipelines floods very well, but little else.

    XOM is not a great operator, but they will be a much better steward of the North Dakota acreage than was DNR. I think we'll see faster development of the acreage.

    XOM also is much better at building infrastructure and downstream facilities (natural gas extraction plants, pipelines, etc.) That acquisition is a good thing for the other Bakken operators and good for the US.
    Sep 24 06:56 AM | 4 Likes Like |Link to Comment
  • Bakken Update: Whiting's Second Quarter Was A Miss But Production Was Better Than Expected [View article]
    I agree with MexCom that WLL’s “miss” is due to oil price. WLL, like CLR, is less hedged than some of the other oil E&Ps. I also agree that WLL is an excellent hedge against oil supply interruptions, like that potentially caused the warmongering of Obama and Romney.

    However, WLL remains a growth story. No one yet knows the potential of the Williston Basin, and WLL has hardly begun to exploit the known potential of its vast acreage.

    Good article. I especially like the comment that what counts is the *current* drilling success of the firm. The past provides nothing but a rapidly decreasing cash flow that must be quickly and successfully used. An oil firm’s value is based on the velocity of reinvesting its cash flow. WLL is one of the best at doing that.

    WLL is also an excellent trading vehicle. I have have well over 100 sucessful round trip trades in WLL, better and more consistent than any other stock I have traded.
    Jul 30 06:46 AM | 4 Likes Like |Link to Comment
  • Natural Gas Bottom Has Yet To Be Reached [View article]
    I think you’re all wrong (sort of). The key to pricing natural gas is in the schedule of supply of drilling locations for oil and liquids wells. At the risk-adjusted cost of capital, what is the supply of drilling locations at various oil and gas sales prices? I doubt anyone knows this.

    I will mention what I wrote in another comment today. Almost all new (including replacement) natural gas in the next couple of years will come from oil or liquids wells, as a byproduct of oil/liquids production.

    Thus it will be the number and the efficiency of rigs drilling for what Baker-Hughes calls oil that will determine the gas supply. I mention efficiency because the capacity of new rigs (including such innovations as “pad drilling”) has more than doubled in the last three years.

    I think that predicting gas prices will be a crap shoot for anyone.

    You can most safely invest in gas by investing in North American oil exploration and production (E&P) firms who will be selling the byproduct gas at whatever price the market will bear.

    I could be wrong, but I doubt it.
    Jul 20 07:21 PM | 4 Likes Like |Link to Comment
  • 4 Safer E&P Stocks To Buy Instead Of Newfield Exploration [View article]
    The transition to oil at NFX happened three years ago. They continued to invest almost insignificant amounts in Gulf of Mexico offshore gas, until eight months ago. Sandridge’s (SD) main drilling is in the Mississippian, which is 52% gas. Aptly named Stock Croc and aptly named Investment Underground continue to embarrass the rest of here at Seeking Alpha with out-of-date information.

    I won’t argue about Whiting (WLL) or EOG Resources, but Anadarko Petroleum (APC) and Plains Exploration (PXP), don’t even make my list of potential exploration and production stocks.

    Croc argues that since NFX’s stock price is down 22%, it’s a bad investment. EOG and Whiting are also down. All E&Ps are down. Croc’s argument is just plain silly. The time to buy any E&P is when the stock price is down.

    NFX’s stock price depends on oil prices but not nearly so much as does more lightly-hedged WLL. (I own both.)

    Except for Michael Filloon, no contributor at Seeking Aphelia understands that the valuation of oil stocks depends essentially on their current drilling success and their inventory of drilling locations. This must be done play by play; for NFX it is Uinta Basin, Williston Basin, etc.

    There lies the real dirt on NFX; for example NFX spent a fortune for leases in the “oil window” of the Eagle Ford. These leases are mostly marginal or sub-marginal. NFX’s fantastic success in the Uinta Basin more than made up for the loss.

    NFX also has a low cost of capital. Its stock sells at forward PE of 10 (the same as WLL), and it recently borrowed $1B for 10 years at 5.625%.

    NFX and WLL remain my favorite oil patch stocks (OAS is third).
    Jul 16 07:17 AM | 4 Likes Like |Link to Comment
  • Bakken Update: The Pronghorn Sand Could Be The Best Pay Zone In The Williston Basin [View article]
    WLL is less hedged than most other independent oil E&Ps. In October of 2011, when WTI oil was $80, WLL was $62. In February 2012, when WTI oil was $110, WLL was $63.

    The higher the probably of an oil supply disruption, the more WLL stock you should own. WLL is my second biggest holding (NFX is first).

    Whiting may have the best management in the oil business. They are very tightly focused on a few plays with the objective of producing the most oil at the least cost.

    I often compare WLL to CLR. CLR has had a higher growth rate, but has a PE ratio of 20. WLL’s PE ratio is only about 9, which (I think) makes WLL a better buy. [I also own some CLR].
    May 22 04:50 AM | 4 Likes Like |Link to Comment
  • Chesapeake Energy: A Great Time To Bail? [View article]
    It's not McClendon's skin in the game it's stockholders, who have lost 50% of their money in the last year. McClendon and all his defenders give the oil field a bad name.

    CHK is speculative at best. CHK has a would-class geo-sciences group, and a wreckless CEO who is more interested in himself than in the people who hired him.

    I've listened to CHK's conference calls and McClendon complains (carps, cries) that the investment community just doesn't understand him. They understand him only too well.
    May 1 07:05 PM | 4 Likes Like |Link to Comment
  • What Will Replace Oil? Natural Gas Vs. Biofuels [View article]
    Oil isn’t running out. Existing oil supply in non-western countries (anywhere except Europe and North America) faces occasional, but temporary, interruption.

    Natural gas will replace oil in many uses, freeing even more oil.

    Biofuels won’t replace an existing amounts of anything, except maybe the marijuana that biofuels proponents must be smoking.
    Apr 26 05:15 PM | 4 Likes Like |Link to Comment
  • Canadian Oil & Gas Equities Trend Lower, Following Natural Gas And A Pipeline To Nowhere [View article]
    Disaster? Last week the number of rigs drilling for oil in Canada decined by 20 from 108 to 88. The number of rigs drilling for natural gas declined by 3.

    I don't know what to make of the shocking numbers.
    Apr 15 07:52 AM | 4 Likes Like |Link to Comment
  • BP: New Upstream Activity Will Produce Massive Gains In 2013 [View article]
    You do a lot of blabing but don't say anything. I would have just ignored this article until you used the term "Rival Schlumberger."

    Rival? Schlumberger isn't a rival of any of these firms it is a service provider to all of them.
    Apr 13 06:25 AM | 4 Likes Like |Link to Comment
  • Sandridge Energy CEO Tom Ward Was Born With The Risk Taking Gene [View article]
    Best article that I’ve seen on SD. Tom Ward is a very prudent risk-taker and risk mitigator. In fact, he has taken most of the risk out of Sandridge Energy. He is in a low-risk play geologically; the oil and gas are there in known amounts; he’s shooting ducks in a barrel.

    He has very low-risk of vendor shortages, since SD’s wells require only conventional medium-horsepower drilling rigs and fracking equipment. SD owns 31 drilling rigs. His marketing is relatively low risk, since his Mississippian play is in an established oil field – adequate oil pipelines and gas pipelines apparently are in place. CEO Ward is more hedged against future oil price drops than any oil and gas producing firm that I know of.

    Mr. Ward essential has in hand all the money that he needs to for his $1.9 billion annual capital budget for both 2011 and 2012. What appears to be “over leveraging” to some has been repaired by SD’s adroit capital maneuvering this year.

    I am heavy invested in SD, and I bought more on today’s “Italian” dip. SD is the second largest of my three holdings (the other two are NFX and WLL).
    Nov 9 03:10 PM | 4 Likes Like |Link to Comment
  • In Europe, The Issue Is Leadership [View article]
    The problem is too much leadership.

    The euro should be abandoned. The good countries are currently saddled with the bad. Greece will always be worthless and corrupt; Greece will always be an albatross hung around Germany’s neck.
    Jul 21 04:52 AM | 4 Likes Like |Link to Comment
  • The War Against Savers [View article]
    Your clients’ money can have no value unless there is a scarcity of money. When Chairman Bernanke is giving money away, why should anyone pay to rent your clients’ money?

    Of course, if savers cannot get any yield in money markets, they may turn to the stock market, which artificially increases stock prices. Frankly, there is no good place to put money today.

    The only thing positive that I see in this disastrous situation is that my North American independent oil companies are able to sell bonds and thus stretch out their bond repayment schedules. That’s just a hint light in this increasingly gloomy world.
    Jun 26 10:50 AM | 4 Likes Like |Link to Comment
  • It hardly matters what Geithner says when seven out of every 10 voters say they oppose raising the debt ceiling, Stan Collender writes. "This almost certainly means that most representatives and senators will need to vote against a debt ceiling bill at least once so that they have something on the record showing their constituents that they were with them."  [View news story]
    Borrow more just to flush it down the toilet on foolish programs? No.
    Apr 20 08:40 PM | 4 Likes Like |Link to Comment