Seeking Alpha


Send Message
View as an RSS Feed
View aaronbecker's Comments BY TICKER:
Latest  |  Highest rated
  • Bakken Update: Whiting's Outstanding Q3 Is Driven By A Better Completion Design [View article]
    @Pablomike - we might not have to wait very long to see just how much secondary recovery can improve resource yields in a shale play. EOG has been evaluating the Bakken's response to waterflooding at its Parshall field since mid-2012. CEO Mark Papa already estimates that downspacing could drive recoveries to ~12% of OOIP at Parshall, with waterflooding offering additional upside if it proves feasible. Given that EOG has one of the best technical track records in the industry, it's not unreasonable to hope for 15%+.
    Jul 30, 2013. 12:41 AM | Likes Like |Link to Comment
  • Athabasca Oil Corporation Is A Classic Deep Value Play [View article]
    The fact that it's too late to pile into ATH as a short doesn't necessarily imply that the stock is a value buy; essentially all of the upside for the long side is contingent on a Dover approval and the short squeeze that would follow. Even if one assumes that ATH is able to ease its balance sheet by exercising its put option with PetroChina, however, potential longs should still take note of the company's strongly negative free cash flow and the scale of the capital infusions required to develop its asset base.

    Athabasca's $264.4 million in capital expenditures dwarf the $6.8 million in operating cash flow earned during 1Q13, and production growth isn't going to fill that gap as long as the company's light oil assets remain in the delineation stage. At $10-15 million/well in the Duvernay, management must either burn cash or issue high-yield notes until the company can accumulate enough positive data to attract a JV partner and monetize its ~200k net acre position.

    ATH is even more reliant on JV partners to develop its oil sands assets, which have development price tags on the order of $100s of millions. With foreign state-owned oil companies like PetroChina all but banned from taking controlling interests in oil sands projects, however, it's unlikely that ATH will execute another $1+ billion JV in the near future. The uncertain timeframe surrounding management's asset monetization efforts, and widespread lack of confidence in their ability to execute, suggest that the stock will stagnate in the wake of any upside from the Dover approval.

    So while Athabasca Oil could yield a profitable short-term trade, capital discipline and a sluggish JV environment present significant obstacles to value accretion that should keep investors with a longer time horizon on the sidelines.
    Jul 30, 2013. 12:15 AM | 3 Likes Like |Link to Comment
  • Exploding The Natural Gas Supply Myth: An Interview With Bill Powers [View article]
    One factor that detractors of the United States' shale gas potential, like Powers, seem eager to overlook is the pace at which technological advances and operational experience are enabling E&P companies to improve their capital efficiency in shale plays. For example, EQT's "reduced cluster spacing" well completion design improves estimated reserves per well by 20-25%, but has only increased per-well costs by about 8% (netting out other efficiency improvements). This is only one of many evolutionary changes allowing E&P players with core acreage in the Marcellus to achieve profitability despite low natural gas prices, and other E&P companies are working just as hard to move up the learning curve for the shale plays in which they operate.

    Seismic and core data from each well the industry completes has the potential to refine lateral placement, suggest better frac geometries, or identify additional formations (think Utica or Upper Devonian). The emergence of shale gas itself is evidence of the industry's ongoing R&D efforts, and each innovation adds to the likelihood of a strong supply response to modest increases in the price of natural gas. Sure, technology is hard to predict. But with thousands of exploration geologists pouring over an unprecedented deluge of new data, technological improvement is not a factor that can be so casually dismissed.
    Jul 29, 2013. 05:12 PM | 6 Likes Like |Link to Comment
  • Giant Well Parade In Susquehanna: Cabot Oil & Gas's 20 Bcf Wells [View article]
    Shale thickness is a likely factor in the lagging production performance on CRZO and WPX's properties in northern Susquehanna County. The Marcellus thins significantly (from >300' to <200') between the "sweet spot" where COG's acreage is concentrated and the townships along the county's northern border (cf. While thickness is far from the only factor contributing to gas production from shale wells, a thinner section of Marcellus underlying northern Susquehanna reasonably implies lower resource potential on that acreage.

    I'm not suggesting that wells in the northern half of Susquehanna won't improve over time, but given the geological differences I don't think it's reasonable to expect wells there to generate returns on par with COG's "sweet spot" acreage to the south.
    Feb 28, 2013. 11:57 AM | 1 Like Like |Link to Comment