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Vintage Petroleum, Inc. (VPI) Message Board

  • imadeadcat imadeadcat Jun 6, 2003 7:54 PM Flag

    VPI's ng expansion?

    When VPI made the Genesis acquisition the thesis put forward by management was twofold. 1. Genesis had high quality reserves and acreage and were worth a premium price. 2. Natural gas was becoming more scarce in North America so gas reserves and gas production would become increasing valuable. The first part of the thesis was incorrect, but the second is being proven daily. VPI got it half right. And, amazingly, batting .500 looks like it's going pay off for VPI shareholders IMO. I didn't think so last summer. Also noticed that the big Saudi NG Plan requiring $16 billon in infrastructure is being scrapped, or reduced. No LNG solution on the horizon and that's the only possibility to bridge the gap long run unless high ng prices reduce demand substantially. Also, thinking back to the last ng spike, there was considerable consolidation...purchase reserves because it's more economical than the drill bit...I expect we will see consolidation of smaller players, VPI excluded due to poison pill and high mgt. ownership. Just more mindless ramble from an E&P know nothing...do your own dd. I hope my favorite player, Wakey, has the knuckler dancin' tonite.

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    • Commonsense, one thing about these gas injections...I saw that theory about the line pack. On the other hand, it is June 16 here in NYC, and the temperature is 68%, and supposed to remain mild all week. The report a week from Thursday could show a big add again, couldn't it?

      While I have read some statements by El Paso et, al. In support of the line pack theory. My gut has been following the 2003 vs. 2002 injections for some time. Based on this cool NH weather I would concur with your statement and had already been defensive before the record 125bcf surprise.

      As far as VPI is concerned very difficult to find anything positive except they have a lot of assets. Csense

    • to make a long story short....everything with vpi STILL SUCKS!!! i already knew that, just had to repeat it again, for how many times i have forgot. carry on loyal soldier

      'hacker

    • Hi laketrack, I pretty much agree with your comments, except for one point: VPI management IS doing what is in their best interests, i.e. maintaining control of the company and paying themselves a lot more than they are worth.

      "Shareholder rights plan" = Management gives themselves the right to screw over the shareholders.

      There, nothing like a good rant!

      Commonsense, one thing about these gas injections...I saw that theory about the line pack. On the other hand, it is June 16 here in NYC, and the temperature is 68%, and supposed to remain mild all week. The report a week from Thursday could show a big add again, couldn't it?

      ~thunder

      P.S. Nice to see posts about the energy biz on this board again!

    • First of all addressing Vintage's strategy, they historically attempt to find inefficiently producing fields, buy them for a low price and then use their "expertise" to lower costs and eak out a profit margin wider than was previous the case. This explains why they have gone into these obscur areas like the Po valley in Italy (by the way the origin of the words like Politics, Polish, ect.), Bulgaria and On-shore Nova Scotia. Genesis seemed a total change in business model. They bought the company at a premium at the height of the market. The situation then was similar to today with prices running around the same levels. It is only now that this looks intelligent, but if prices fall going forward, it won't.
      >>Also noticed that the big Saudi NG Plan requiring $16 billon in infrastructure is being scrapped, or reduced. No LNG solution on the horizon<< Not so true. If you take a warm summer day and stroll along the waterfront of Boston, you will see one LNG tanker after another coming into the new LNG decompressing facility and electrical generating plant in Everette, Ma. This was not the case twenty years ago. This plant has also been expanded in anticipation of the Nova Scotia production (off-shore now, but who knows?) of Ngas. All the infra-structure into the North East has been expanded and upgraded with futher increases in energy production from that source in mind. Futhermore, it would be to Vintages advantage to see better technology introduced for long-haul transportation of Ngas from the Mid-east in that they have already discovered huge reserves in Yemen. Williams has been working on a new technology to compress Ngas which isn't as expensive nor as pressure intensive as LNG. If they are successful, your scenario will not actualize.

      • 1 Reply to tycoonguy
      • My understanding is that the Distrigas facility has been in Everett for over 20 years( but the capacity has increased). My point on Saudi project remains. We need lots of big investment in compression or lng (ala Qatar) to solve the impending ng scarcity in North America. Agree VPI looks smarter now because prices are high. Yemen; lets hope VPI's future doesn't hinge on that find with all its' potential issues....my suspicion is that VPI will monetize those reserves when possible.

 

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