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Jan H. Lessner

Jan H. Lessner
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  • IAMGOLD: A Falling Stock Price In The Face Of Improving Fundamentals Presents A Unique Opportunity [View article]
    Regarding "burning cash" and "cash bleed": IAG hasn't just dumped the money in a hole or spent it for consumption or loosed it. They f. e. in building the Westwood mine, which has lower cash costs than their current average.

    Westwood now has been completed and has start commercial production.

    Obviously future CapEx will be lower, since Westwood is already build. With Westwood production rises and average cash costs decreases. This effect will be seen in the next quarterly reports.
    Oct 18 05:57 AM | Likes Like |Link to Comment
  • Energy XXI: High Cost, High Leverage, Weak Energy Prices, Good Short? [View article]
    The Saudis are very opportunistic in their statements regarding the oil prices. Not long ago they stated, that $ 100 is a fair price for all kinds of producers and customers.

    Now they accept less, but if there happens a revival of the Libyan output disruptions or any other substantial changes in favor of a higher oil price, I wouldn't be astonished to hear from them, that higher oil prices are required.

    In my view the Saudis try to get as much as possible for their oil and the acceptance of currently lower price doesn't reflect a willingness to help the customers by selling cheap.

    If they see a chance to get the major OPEC producer behind a more disciplined production they won't hesitate to grab the chance of higher prices.


    Oct 18 05:42 AM | Likes Like |Link to Comment
  • Energy XXI: High Cost, High Leverage, Weak Energy Prices, Good Short? [View article]
    You made the thesis, that EXXI may have paid too much and cite the former EPL CEO as witness:
    "We think the price we got was very, very good for our shareholders," [EPL Oil & Gas CEO Gray] Hanna said about what he called a great "premium." and "I think it was the right deal at the right time,".

    He said what every seller says. Of course he doesn't argue having made a bad job. If he had said, that the company has been sold at a discount, he would accuse himself of failure.

    If I remember correctly analysts mean consensus had been, that EPL's stock price was substantially below fair value and thus discounted. Of course a buyer had to offer a premium.

    Thus saying that it was a good deal for EPL shareholders doesn't mean it has been a bad deal for EXXI. Saying that EXXI paid a premium doesn't mean, they overpaid. Obviously EXXI paid a premium to the pps but that gives no evidence for Your thesis of overpaying.

    With all due respect: Your thesis may be right or not, but You flawed it by a false argument.
    Oct 18 05:21 AM | Likes Like |Link to Comment
  • Energy XXI: High Cost, High Leverage, Weak Energy Prices, Good Short? [View article]
    Dayrates for drilling rigs have fallen deeply. Thus CapEx will be much lower automatically and without reducing exploration and development drilling.
    Oct 17 05:16 PM | 1 Like Like |Link to Comment
  • The Forgotten Issue Facing Seadrill [View article]
    If there are delivery delays, which are within the responsibility of the ship yards, that should be the option to cancel the newbuild contract.

    This is what is currently discussed between SDRL's majority owned company Sevan Drilling and the Chinese ship yard COSCO.

    In case of cancellation Sevan Drilling should receive back the first installment payment. This would obviously be not nice for COSCO, but it would turn negative cash flow into positive cash flow.

    I doubt that Sevan Drilling as well as SDRL can really cancel these contracts easily. Otherwise they would have done so. But if the pressure gets higher, it could be an option to cancel the contract by agreeing not to get back the installment payments.
    Oct 13 04:20 PM | 7 Likes Like |Link to Comment
  • Awilco Drilling Is Still The World's Most Undervalued Company [View article]
    Fundamentals don't count in this market. It is all about sentiment and this is very negative. As long as a continuing sell off is expected everyone waits for even cheaper prices.

    Anyway one should calculate a conservative/pessimistic szenario in which AWLCF cannot find a new contract for the rig rolling off contract NOV2015. I assume that they then would delay the yard stay and cold stack the rig.
    Oct 11 05:03 PM | Likes Like |Link to Comment
  • Energy XXI's Horror Show Can Have A Happy Ending [View article]
    There is another publicly traded shelf operater, WTI. Further the majors could Come back to the shelf, when EXXI can show that they can revive the matured oil fields by new drilling technologies.

    Anyway a buyout even with a 50% premium to the current shareprice wouldn't give the shareholders the full potential of this stock.

    They have hedged against a further drop of the shareprice thus a further drop wouldn't hit EXXI as hard as other with less hedged production.

    The debt load is easily manageable. They can dispose some non-core blocks and they can cut down CapEx if necessary. I don't see such a necessity since drilling expenses come down due to the glut of rigs and other costs due to economy of scale.
    Oct 11 01:21 PM | Likes Like |Link to Comment
  • Update: Energy XXI Q1 2015 Operations Update [View article]
    Haven't they several oil price hedges in place? These hedges should protect the revenue against further decreasing oil prices.

    Aren't drilling rig expenses a major part of the CapEx? According to the market offshore drilling rig providers like HERO, RDC, PGN, etc. will accept ultra-low dayrates in 2015.
    Oct 9 06:21 PM | Likes Like |Link to Comment
  • Update: Iamgold Sells Niobium Operations [View article]
    They should have done so much earlier and at a higher price. Anyway this move is clearly positive as Hebba has pointed out.

    Anyway the market hasn't liked it and has sent the stock down heavily. I think what the market really would like to see is a further cost cutting. Averaging down the costs by buying a low-cost mine is just cosmetics. I assume the market would react with even more selling.
    Oct 8 03:10 PM | 1 Like Like |Link to Comment
  • Hercules Offshore: Fleet Status Analysis As Of September 17, Where Is The Bottom? [View article]
    Dayrates in the Norwegian an UK North Sea are above the international average because the regulatory requirements limit the competition. So, if the Triumph meets these requirements, it is reasonable to send her to the North Sea.

    Statoil just has terminated a contract with DO for the Ocean Vanguard, since this rig doesn't meet the requirements. This may indicate, that there will be less demand in North Sea waters too. Anyway there shouldn't be much difficulties for HERO to find a contract at sufficient dayrates for the Triumph, if the oil prices turns back to 100 USD/Barrel.
    Oct 5 06:00 PM | Likes Like |Link to Comment
  • Atwood Oceanics Inc.: Complete Fleet Analysis And Status As Of October 1, 2014 [View article]
    I would assume that order backlog is the most important figure in the current hostile environment. Not the absolute figure, but the percentage of contracted rigs for 2014 and 2015.

    If a company has a contract coverage of 100% they should be insulated against a drop in dayrates. They should even profit from dropping dayrates, since this should decrease labor costs.

    Anyway, if this was true, Songa Offshore, Awilco Drilling and Ocean Rig should be the big winners and outperform the others. This hasn't materialized yet. Also ATW and RDC should profit from there quite good and above average order backlog.
    Oct 5 04:13 PM | Likes Like |Link to Comment
  • Cenovus: More Than Meets The Eye [View article]
    There are many theories why the Saudi-Arabians may accept lower prices. Antobet theory is that they agreed to assist the USA in the battle with Russia. Lower oil prices will deeply cut into Russia income.

    But the Saudi-Arabians need the income to and there are estimates, that they need at least a price of 100 USD/barrel.

    Selling cheaper won't help them to fight unconventional oil production. Some companies would bankcrupt, but stripped of their debt by chapter 9 new owners would continue their business.

    I think that the OPEC will decide to decrease production in order to get back to a 100 USD price level.
    Oct 5 03:58 PM | 1 Like Like |Link to Comment
  • Cenovus: More Than Meets The Eye [View article]
    Thanks for this!
    Oct 5 03:40 PM | 1 Like Like |Link to Comment
  • Atwood Oceanics Inc.: Complete Fleet Analysis And Status As Of October 1, 2014 [View article]
    Currently all offshore contract drillers are out of Mr. Markets favor and that's true for ATW too.

    Anyway, they have a modern and capable fleet AND a balance sheet like a fortress. They have a financial room for breathing which isn't found at competitors.

    Despite this You are right, the market wants to see contracts for the two newbuilds and high dayrates. I assume that they will find work for these rigs, but if the dayrate is above 500k I think it will be of short duration. Anyway, a such UDW drillships have low break even level. So even at dayrates below 500k it will be profitable.
    Oct 1 02:30 PM | Likes Like |Link to Comment
  • Cenovus: More Than Meets The Eye [View article]
    I haven't watched oil sand companies since I thought, that producing boe from oil sands is generally the most expensive way to produce oil.

    This seems to be not true or is it correct in general but CVE is an exception?
    Sep 30 05:12 PM | 1 Like Like |Link to Comment
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