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San Juan Basin Royalty Trust Message Board

  • KHospitaller KHospitaller Feb 27, 2006 10:58 AM Flag

    Another wretched day for energy

    Natural gas is breaking down even further. Only thing working for me in this sector are my short positions on the XLE and OIH. It looks like there are going to be some bargains that will be hard to resist though, like HEC.

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    • Thanks, good info on the timeline/pressure adjustment sequence..

    • The roughnecks realy know very little about the well production.

      The more prolific wells are drilled prior to 10/1 date of Forest closure or 11/1 Wintering Closure date as the majority of the PUD's are in those areas. The wells are drilled and about a month later many of the wells are completed rigless and a rig/well service unit is put on the hole to run the tubing, and a flowback crew is put on the well to do clean up. In the month interval the well facilities are installed on the well and connected to the P/L. The wells are usually on a twin location to minimize the foot print and disturbance. After the well is completed and cleaned up the well is connected to the well facility and 1st delivered.
      The problem is the gas gathering system is constrained. When a 1.0 MMCF/d well is put on line the net total volume from all the wells is reduced about 0.650 MMcf/d due to pressure on the gathering system being increased by the new well and backing off production of the pre=existing well producion. Over time the older wells do somewhat regain that previous production level as they adjust to the higher pressure and as the new well production declines. The steepest decline is within the first year of production.
      The wells are drilled and completed geographically to reduce lost rig travel time. Wells can be within a mile of each other and because of the rugged terrain it can take a day to travel between them.
      This may be more info than most need to know and many may not understand wht I am even talking about. FWIW.

    • The other question is if the capex $ are for infill drilling or tapping entirely new producton horizons. Rate acceleration vs. new production. (I have not read the capex program.)

    • Capex = capital expenditures. In this case, we are referring to SJT's capex which has increased dramatically the last 2 months, hopefully leading to new and higher levels of sustained production. The unknown is whether the new production will incrementally exceed the current rate of existing well depletion ---- it should, but we don't know for sure, it will be 3 to 6 months before we start to get a clear picture.

    • Would someone please define "capex program"?
      It's short for "capital expenditure". What major expenses is co. projecting for the future in order to grow? If not capex program, no future growth...

    • Would someone please define "capex program"?

    • It's important to understand and be able to decipher the trends in a stock such as SJT. Although February's distribution may seem like a trivial issue, two key things could possibly be gleaned from the actual amount of the distribution:

      1. If it turns out to be a smaller than average distribution because of short days in the month, there may be panic selling and opportunity for a shrewd buyer to make a cheap entry or addition.

      2. If the distribution is larger than we would expect for a short month, then it will probably be due to the expanded capex program and if the stock does not move much, again it may be a buy signal for the smart investor.

      FWIW, looks like total gas flows at the San Juan hub will be 7% lower in February than in January, even though pipeline capacity has been 92% in Feb compared to 89% in Jan --- just what you wouldd expect during a short month. This may or may not be predictive of SJT's gas production as the two phennomena are weakly related.

    • I'll take the "blame" for that discussion. While I agree with you that one SHOULD not trade that away, it is not wrong IMHO to identify a reason why others might sell after a bad distribution number is announced. If one is looking for an entry point, anticipating that the distribution based on February production might be surprisingly low to many who don't do the calculations that some do here or focus on the 28 day month, prudence MIGHT dictate waiting. One could disagree but I don't apologize for raising the issue for people to consider.

    • " Are we really buying and selling this damn stock over the difference of 2 or 3 cents in monthly distributions? "

      If you look back over the long history of this message board, you will find that most of us are long term holders of SJT, just musing about what price we should look for when we add more SJT. It is natural that with the current bear market for NG we should have considerable uncertaintly about when to buy more. My basis for my current SJT holdings is $18 and I will buy more if SJT drops to 35, which may happen this spring.

    • Are we really buying and selling this damn stock over the difference of 2 or 3 cents in monthly distributions? And are we making decisions on selling over the number of days in the month (Feb)? What absolute horseshit! If this is the case then I encourage all those people to look for another stock to trade. 'Cuz this stock ain't for day trading folks.

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