Screencast: Oil And Natural Gas - The 10-K Crisis

Dec. 03, 2015 11:22 AM ETUNG, UGAZF, DGAZ, USO, OIL-OLD, UWTI, DWTI4 Comments
Dallas Salazar profile picture
Dallas Salazar
5.23K Followers

Summary

  • Estimating oil and natural gas E&P company viability is extremely difficult.
  • Even more difficult -- for those looking to do the near-impossible -- is estimating oil and natural gas E&P company "future cash flows."
  • But this is exactly what the SEC and FASB try to allow for in their "PV-10" and Standardized Measure of Oil and Gas (or SMOG) metric reporting.
  • We breakout 30 SMOG calculations as well as a spatial comparison of SMOGs in an effort to provide context as to what could be a coming 10-K crisis.
  • All data and modeling is presented via BI-derived data-visuals.

I believe investors should use the following data visuals to manage overall oil and natural gas E&P exposure as well as overall "delta to SMOG" exposure (indicated in the dashboards within the visuals), as the delta to SMOG could be closed (to parity) or taken negative in a worst-case or crisis-selling scenario. For some of these names, that's some distance away from a market cap to SMOG standpoint.

For others, as indicated in the bullet points above, the delta to SMOG has already more than been closed. For some, market caps have adjusted well beneath full-year 2014 SMOG calculations. For this particular grouping of names, there might be relative value present as capitulation might have presented or be presenting an opportunity to add at way oversold levels. I believe the "stressed" names within the data visuals often express this. In any and every case, I believe the data-based, BI-derived visuals present a valuable source of total-analysis information.

This article was written by

Dallas Salazar profile picture
5.23K Followers
Dallas Salazar is the CEO an Austin-based consulting firm that specializes in private company lifecycle management, up to and including taking companies public, and in helping consult publicly traded companies. Mr. Salazar is also a venture investor in a portfolio of energy and commodity startups, including startups extracting oil, natural gas, helium, and carbon dioxide, as well as engaged in the business of large scale carbon sequestration. Mr. Salazar has recently had large exits in Comstock Resources, Eclipse Resources, Torchlight Energy, as well as numerous privately held natural resource and commodity extraction ventures.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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