I just realized after re-evaluating MHR that I have made a huge mistake.
I am buying on margin at $6.50 and will be buying this up to $12 at which point it will more than double to $24.
This is the next BEXP and all of MHR's PUDs will be equal to BEXP's Three Forks/Bakken wells.
Again - EVERYONE - STRONG BUY UP TO $12 - be sure to put extra on MARGIN at $12 - mortgage your home when this hits $12!!!
Don't pay any attention to what Dan Hughes or Suemaur have done with their rights in the area very recently, with some calling for a bubble....but you would not know who this is anyway...
I am not saying MHR won't make some money someday, like someday they may post a profit even after adding in non-cash items and just measuring EBITDA (which they have not yet, no positive EBITDA yet, we are waiting =D... lots of shares issued and debt issued though) they very well make some money just because oil is probably going back over $100 - those of you who think this is a value stock though - hahahahahahahaha
again BE SURE TO MORTGAGE THE HOME!
Your "Full Disclosure" says that "I rode this company from $3 to $6+ and am out." You've doubled your money on this stock, yet this is the first time you've ever posted here.
This, despite the fact that you have countless posts on the AMZN board with headers like STOCK AMZN HEADED INTO THE ABYSS LONGS WILL BE BANKRUPT! and MARKET CRASH TOMORROW AMAZON DOWN TO $120 GET OUT BEFORE YOU LOSE IT ALL LIKE 2008!
And you have numerous posts on the AXAS board with statements such as "I have been asked by countless members of the board to post my buys and my sells due to my track record".
So countless people are clamoring for your buys and sells, yet you have never graced us with your cutting edge recommendations, even though you've doubled your money here.
And now, out of nowhere, because of your generosity, we get the call that MHR is smoke and mirrors and hype, and that you are completely tuned in to what the THE REAL SMART TEXAS OIL MONEY IS DOING.
Please. You'll excuse me if I'm more than a bit skeptical.
First, Magnum Hunter is a turn around story. If you do some due dilligence, you will see that the current management team has cleaned house and taken the steps to turn MHR into a highly successful E&P resource play.
Second, earnings and positive cash flow are 2 very different animals. MHR is cash flow positive, earnings are a GAAP machination that is subject to numerous non cash charges.
Third, Production is rising rapidly as MHR commences several drilling programs in highly prospective basins (Marcellus and Eagle Ford).
Fourth, Magnum Hunter has something like 24,000 net acres in the Eagle Ford play. Many companies are paying as much as $5000/acre for this land. They have something like 27,000 acres in the Marcellus. Again, companies are paying huge sums of cash for this type of blocked, contiguous acreage, perhaps as much as $3000-$4000 an acre.
They also have a slew of existing production, around 2000 boe/d from a combination of conventional and waterflood properites, including acreage in North Dakota that might be prospective for the Bakken,Three Forks and Sanish formations.
Fifth, they have a nice pipeline system in Marcellus that they have JV'd with DCP Midstream and will be growing at a very fast clip over the next couple of years as sections of W. Virginia and Ohio that have never had take away capacity (ever!) are opened up to drilling. MHR is using that pipeline as a means to gain working interests, farm ins, JVs and partnerships to drill on acreage held by small mom and pop E&P's that cannot afford to drill a Marcellus well or do not want the risk.
Finally, if you look at most E&P companies, they are valued around 5-7x cash flow and in some cases more depending on the amount of acreage they ahve. If you look at MHR's production or rather its anticpated 2011 production, assign a $60/bbl netback, multiply it by 7x, you can see that this is easily a $8-$10 stock.
Join the ride, the train hasn't left the station yet.
Thank you for your articulate reply. I have a few questions.
Exactly what "GAAP machinations" are preventing MHR from showing a profit?
Even at the land prices you quote, the Eagle Ford land is worth about $120M and the Marcellus land is worth around $100M. That is a very long way from $450M. Do you really think they could get those prices today? Let's face it there is a natural gas glut that seems have no end in sight. At some point you have to expect land prices to fall.
Exactly how much experience does the current management team have with fracking? I understand it is very challenging technically and that what work in one area does not necessarily work in another.
I hope my questions don't sound too negative. I have found that considering the negative case for a company allows me to invest with confidence. I am a long-time investor (30 years). I understand the joy experienced by investors who acquired these shares for under $.50 a share. However, after reading many of the posts on this board I can not help but think the run from pennies a share to $6 has affected the judgement of some investors.