... another low volume down day, all day long, until the last half hour, when the volume kicked into high gear and the price recovered most of its daily decline. The bulls are in control and I think the die is pretty much cast here...onwards and upwards. Good luck to all.
Sentiment: Strong Buy
Global Hunter Quote: TPLM's average well cost in 2013 of $12.38MM ($348MM for 28.1 net wells and excludes the money paid to its RockPile subsidiary), tells us that the economics will quickly become marginal with a pullback in crude prices (at 10% discount to our long term $82 WTI price and 575 Mboe EUR, we see project IRRs of ~15%)."
I get the same IRR when I use my model. They are using 12.4MM well cost and $82 realized price(this could be quite low since we are currently getting 92+). Keep in mind these IRR are based on a well operating for 35 years or so.
I used 9.25 million per well in my model. I was merely stating that Global Hunter was using 12.4 million. If anybody would like to shed some light it would be great.
Interesting model but the assumption of cost per well is over 30% higher than actual company audited results indicate. This is more than an error of detail. It changes the entire IRR at $92. I wonder why someone who decided to downgrade would consciously inflate cost ? Hmm. I have to think about that a bit.
Sentiment: Strong Buy
I have a working model which I tested against several companies numbers.
92.00 82.00 72.00
700,000.00 47% 35% 29%
650,000.00 45% 35% 18%
600,000.00 40% 31% 13%
550,000.00 35% 26% 19%
500,000.00 29% 22% 16%
450,000.00 24% 18% 13%
Those are the IRR's I am getting for TPLM for a given EUR and Realized Oil Price.
I am assuming 15% Royalties, 5% Production Tax, 6.5% Extraction Tax, $12/Barrel in Operating Expenses, adn I depreciate the CAPEX for the well over 10 years, weighted on production(This could be wrong but should be offset by the higher expenses I use). As for the decline curve, it can be modified. Most of the money is made in the first 5 years, so it doesn't really matter all that much if wells go dry after only 5-10 years.
TPLM wells are more in the 450-550 range. As you can see IRR really increase with much higher EUR. That explains why some of the players have a PE that is twice as high at TPLM, even though it is smaller and growing faster (going from zero to something is big growth).
Global Hunter had TPLM wells with a $12.4 million cost. They simply took the net wells and divided them into production CAPEX. I am not sure if that is correct or not, it seems strange that they would not go with TPLM started cost of 9-9.5 million and falling. If wells cost 12.4 million we see IRRs of 19%, 14%, and 9% with crude at 92. I can see why they would downgrade if that is their assumption.
If anybody wants to test inputs or change assumptions I can do it and give you the output.
The Bakken is indeed economic, but we realistically need EUR of 500k+ and crude oil realizations at 85+ to meet our costs of capital (especially in areas outside of the “core”).
So yes, the Bakken is indeed economic, but the wells need to be at least 500k EUR, and crude oil prices are north of 80. I consider $72 the "breakeven", but at this price level WTI would be at roughly $82 and the IRR would barely hit the cost of capital. The stock would get crushed.
We need realized price 85+ and EUR of 500k+ and we are good to go.
Marvin, the philosopher has revealed an important force of nature that should not be ignored. There are times when the best action is to be still and patient. There are few day traders who are philosophers but this is the essence of trend following. Observe, draw a line and follow the trend. The trend is your friend until it ends. I am not talking about one day, 30 days , 60 days etc. Pull your graph back to 1 year and ask yourself is it up,neutral or bending down.? A new high which certainly could happen soon sets a new level of support. I wait for the happy occasion.Enjoyed the post Marvin. Can you imagine how stressful being short on a stock that is growing faster than the market with earnings that are growing 3 x the PE ratio in an up market on a commodity that is in high demand and there appears to be no slack in demand in the near term let alone the long term. Wow ! These are brave individuals.
Sentiment: Strong Buy
I never said I was a professional equities investor. I am a former energy trader who is an amateur equities investor, just like you. I am sure you will go on and tell me about all of the money you have made while excluding all of the money you have lost. I imagine KOG was the one big win you have ever had in your life (if you really did own it all the way up, and of course you would never say otherwise if you didnt), and you are just one trade away from blowing yourself up. Furthermore, I bet if we plotted your total portfolio returns against the S&P500 over your investment life you probably severely underperformed it on a risk adjusted basis (not that you would have any idea what that means).
This conversation is quite boring as you are another talking head bullshtter blindly pumping with zero focus on actual underlying fundamentals, attacking anybody who wants to discuss what a company is actually doing. The reality is nobody gives a sht what you or I think and nothing said on these boards will ever matter to any of the real institutional investors that are moving these stocks.
....on low volume. On the other hand--that volume represents shorting doubt and day trader anxieties. I would offer them some Maalox, but it may interact unfavorably with the H2 blockers and acid reducers they already take..
TPLM will soon surpass $12 to establish higher resistance levels. Shorts and Day Traders are not going to change that. Rely on Emerson for the rule governing the inevitable:
"The rule is not to dictate nor to insist on carrying out each of your schemes by ignorant willfullness, but to
learn practically the secret spoke from all nature, that things themselves refuse to be mismanaged, and
will show to the watchful their own law."
That comes from his essay "Wealth"--worth your time.
Are you kidding? I bought my first KOG position in early 2009 at $2.40. I bought many more over the past five years--sold some, but always maintained 50% long. When KOG sold last week, I was taken by surprise, but I still had a bit more than my 50% position--28000 shares (about 65% of my original earlier positions).
I won't criticize you for being unaware (though you are quick to criticize others), but to suggest that there are no posts for KOG at low pps is,,,well...strange.
Find me a post, any post when KOG was trading 1.00. I believe I didn't start even watching it until it was 8 bucks. Welbie, the pumptard who thinks he is part of the company when he owns shares
If you are such a "professional".......where were you before KOG $8.00 ???......& yes ..when you buy shares in a "public company".........you (as an investor)......own "part" of that company.......it is indeed "ownership"...........lol..............this is 101 stuff there "professional".......ha !
Sentiment: Strong Buy
I think the point is there is no perfect company. Even KOG has it's flaws (large debt). You have to decide if the good outweighs the bad. TPLM may not have the best leases, but that doesn't mean they can't be successful with them. They clearly chose to diversify with RP and CM plus they are still sitting on 50k acres of untouched Montana leases that are adding no value yet. Don't know what else to tell you.
Yes Sir........great place to be right now! I would only consider loading more TPLM if there is some type of overall market correction. Fundamentals look great with $12 the current ceiling until next quarter earnings. Any merger or takeover will be gravy like KOG! Keeping my KOG-WLL...have a very good long term feeling about it! Still think...maybe dreaming that TPLM and OAS will be with WLL and KOG someday? You never know...crazy things do happen. GLTA.
Fab--I think that baby oils cannot do much about serious short interest. As you have shorted from time to time, I think you will understand when I say that external variables can drive shorts just as much as internal variables. So--shorting baby oils (not just TPLM, of course) anticipates higher interest rates, lower demand than projected, and the neutralization of some global geopolitical impacts that seem to have less effect now (Ukraine, Israel and Gaza, Iran, Syria, and even Libya, to some degree). Additionally, shorts know that the Europeans, weak and willfully retrograde, will continue to stoop for Russian oil/gas rather than stand for encouraging the export of American oil/gas. These external variables fortify the short position. Secondarily, shorts can smell the end of efficiencies for the baby oils--none of the babies can increase productivity forever. And they view decline rates with delight--seeing them as far more dangerous--even in the intermediate term, than we do, Many will need consolidation to mediate marginal declines given price volatility. These internal variables fortify the short position.
So--I don't anticipate the bullish signal you (and all of us longs) would like to see. That doesn't change my assessment for TPLM one bit. This company is better-positioned to deal with these external and internal variables than, say an MHR, AXAS, EOX or ZAPTF. So--I am not blindly confident, but I feel a lot better about the long-term with TPLM than I do with many other baby oils.
You may be correct about that. From a an implied latent premium from a M&A perspective. I do see some opportunity for some accelerated growth if there are substantial savings that can be realized. I do not know the details of WLL 's operating mechanics so I really don't know what synergy this merger brings WLL other than a nice impact to revenue and reserves. And that could be enough to drive reasonable growth. I do agree with you 100% the sweet spot is 1-3 billion companies have the most pop opportunity. I have added WRES about 60 days ago and have had a spot of good luck with this holding. It will be interesting to see how it plays out. New management there and the CEO has been very effective initially. I do not see it with the same horse power at this stage as I did view TPLM at the same stock price ( around 5 ) but it is doing some good things.
Sentiment: Strong Buy
Marvin, I agree about our current status here. We are looking pretty good. I am concerned that more investors coming on board has not pushed the valuation even higher. I believe this will occur in concert with the next earnings announcement. The conference call will be extremely important to me as I am interested in the future guidance and forecast which has been very good but there is some lack of trust factor that has allowed the short interest to maintain a high percent of the float. This should not be as the company continues to perform at a high level.
I do short some stocks from time to time and for the life of me I do not understand the short thesis very well today.if there is a belief in a "Black Swan Event " this is not the best stock to short by any thesis I can understand. If it is a lack of belief in the performance which Pathus indicates from time to time , I can understand that but it should abate as the earnings continue to run past street expectations. A reduction of 3-5% in the short position would be a very bullish signal. A merger in fact will pop many shorts out but I do not invest with a merger as my primary or even secondary factor in my thesis. It does however have a better cadence as the baby oils begin to come of age in the Bakken though. In any case the target for me remains 18-20. And from a comparative PE analysis that could happen very easily without any merger activity. Marvin you and GPG and others on this board are intelligent investors and I appreciate the discussion we have.