Deep: I know you are a big KOG supporter given your posts on the KOG board. Recently, you have started to post regularly here on the MHR board as well and, typically, your message is to recommend selling MHR arguing it is too gassy etc. While you are certainly correct that MHR's production does not yield the same equivalent revenue as other companies producing more oil (for example, KOG made $78.13 in 4th qtr revenue per boepd vs $62.37 for MHR), how do you factor in ROR in making your recommendation?
I ask because MHR's IRRs appear to be higher than KOGs. I say this based on the two most recent presentations where KOG shows IRRs of 45% to 57% for oil wells at $85 to $95 oil, whereas MHR's IRR for its Williston wells appears to be about the same; HOWEVER, MHRs IRRs for Marcellas wet gas (that you are complaining about from a revenue perspective) are around $87% for $4.14 gas. Admittedly, MHR is a year or so behind KOG on overall revenue, but it seems MHRs prospective profit margin is higher, so why do you consider MHR a strong sell while KOG is a strong buy?
I own both, but I am always interested in learing more and would appreciate your insights? (Along with those from others). TIA, Lex
A q & a from the last conf call revealed that their IRR numbers are WRONG!! Wow wow what a suprise right? Presentations from mhr are so false its not even funny. NGL have been lower for quite some time but yet they still use a figure from a few years ago. Yeah I know they have a diclaimer on their figures but how about just making the figure correct at the time of release of presentation. That is pretty shady if you ask me.
That is pure BS dude, you have get some better material. Why do I invest in O&G companies you may ask? BECAUSE I am in the business, I know the business and MHR is a steal at these prices. The last conference GE got shut down by his lawyer or he would have broke it down for you. They came out delivered EXACTLY what they said all along. You and a few others that post here are the only liars.
Excuse me for an add to your question; Knowing Deep for numerous years as a savy trader in the sector. I got into KOG (late for 3x gains but good for a double) pure Lt Swt "Dome" & I bought MHR as a Long Term 'GAS' hedge.....Thats when gas went down severely MHR down BUT that when GE recognized his problem and started his RAPID portfolio diversification to MORE OIL....(.KOG is flaring their gas while MHR is capturing both) MHR gas is turning as US Energy Policy is rapidly turning to infrastructure development and export. First of 2014 Secretary of Energy is expected to announce MAJOR acceptance decisions regarding EPA, and new energy NAT GAS programs for economic / employment and export reciepts for US to dramatically improve into 2015....I think Deep recognizes this.....?????