My take on most important subjects:
First is that pipeline sale plans are off. GE said he has a billion dollar bid, but thinks it is worth more than that, so wants to await fill up, which should be late next year. Said PL ebitda would go from $50m next year to $125m the year after, so it make sense to hold off selling for now. Moreover, MHR keeps control over line while focusing its expansion to their own properties. Second, is the new slides in the presentation with 12k anticipated production coming on line in November and December. Should take MHR from current 16k+ of production above the estimated $25k eoy projection. Third, is Farley well is on 9th frack stage and apparently back on track for completion and testing with GE hoping to have test results by time of operational conference call early next month. No need to rest well given carbonate (not shale) production zone. Fourth, continuing to make divestitures to help fund ongoing development and focus on core operations. Fifth, Divide County Ambrose wells are performing well and will result in reserve growth given high EUR models. Sixth, results from PDC's Garvin well in close proximity to Farley should be out soon, and Tippens well, which is 9 miles from Stalder is 20k a day gas well based on equipment limits (and could have much higher potential), so other local well results should bode well for MHR. Those are most of the high points as I understood them. Lex
slab, i just listened to the replay of presentation. At the very end, there were questions on the Farley well...and it sounded like he was hedging on how many frac stages they were going to be able to successfully complete (two cement jobs to fix damage from the blow out was one thing). If you get a chance, i'd like your impressions of his comments at the very end of the presentation...
Sorry Slab, I do not recall what was said other than the comment about the 9 mile proximity to the Tippens well that Eureka Hunter is carrying to market and its 20k equipment-limited flow rate that GE guessed might be a 30k+ a day potential. Don't know how he got his higher guesstimate, but he threw out the 30k figure.
I was surprised no one asking Q asked what line MHR planned to use to bring Farley production to market. I notice that slide 29 (?) has a TCO line that looks like it is only a few miles from the pad, so maybe that is the short term solution pending development of the Beverly extension.
Also does not need to sell the pipeline with stock price up here. The warrants will bring in a good deal of money once they are converted to stock and the preferred E will reduce debt once they are converted to common stock when the common gets to about 10. They have other assets to sell and feel comfortable with that cash that is raised.
The Series E convertible preferreds are not callable until November 2015 and it is highly unlikely that they will be converted until they are called to force conversion. Just because the converts are "in the money" does not mean that holders would choose to convert. They wouldn't. If the common was at $10 per share the conversion value would be $29.41 per Series E share, the preferreds would probably trade around $31 (6% conversion premium) and if holders convert into common, they lose the value of the premium plus they lose the right to collect the monthly $0.166 dividend. Doesn't make sense. Won't happen.