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San Juan Basin Royalty Trust Message Board

  • ace4s0inurface ace4s0inurface Apr 23, 2012 9:47 PM Flag

    Weak hands

    SJT way oversold.... scared retail investors puking it up

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    • ERF is an operating company that has been somewhat tarred with the CHK problem. Recent debt placement should come close to solving the cash flow problem. What is referred to as a problem related to whether they can sustain the dividend, not whether they will go broke as with CHK. Note that ERF is at least 50% oil producer, not 100% NG.

      Now, as related to price comparisons, It is my suspicion that someone has been supporting the SJT price and has somewhat pinned it at $17 for a few weeks. SJT is not a very large cap and is fairly thinly traded so one large hedgie can do that. But maybe not. In any case, ERF is a much better value than SJT on a current and future distribution basis.

    • You are fortunate that SJT has stayed so strong. I believe it will continue to drop as investors realize that they are holding a dry gas royalty.

      I do however also disagree with folks that bandy around PV10's on this or other trusts.

      Reserves continue to get booked every year. Now granted, SJT's reserves are dropping, it still has a very long life ahead of it.

    • Since you mentioned Enerplus it has tanked about12%
      I hung on to my SJT and HGT with Gunlach for now and glad I did, its reflecting the price of nat gas fairly well still as it historically has. It seems as if SJT has assets that are not even being considered in the price cause with nat gas prices this low they are not worth tapping however it will be a whole new ballgame if nat gas prices go north of $4.50. Anyway I decided to hang in there with Gunlach, I am sure with the amount of assets they run he had at least one geologist and engineer look at the assets in their team of researchers.

      Good luck, I'm gonna hang on and ride it out, but it does seem like the bottom of nat gas and SJT are behind us at this point.

    • Thanks for the information, good intro to many possibilities. The geologist I mentioned Art Berman did say there was some good shales and did mention the bakken shale was one of them in an interview.

      Buying silver at $14/oz was real easy so was buying gold, trying to buy natural gas at $2 I am finding much more difficult. I'm a little tired of researching, I wish I could buy the the real stuff, but obviously storage is expensive and difficult and futures prices 2 years out is double todays spot. One reason I liked SJT and HGT so much is that they correlate with the spot price of nat gas more than anything else I have seen.

    • The shale plays are not all shams. Almost everything in the Bakken oil development is from a shale formation and horizontal drilling / fracing.
      Consider what XOM paid for XTO. XOM is not infallible, but you can be sure that they did not buy a pig in a poke sack without thorough investigation of reserves. Certainly the gas glut has surprised them too, but it is not the lack of reserves that will do them in.

      Instead of trying to tell me what a gas genius Gunlach has become, so that he can make ham from hog nuts with SJT, why don't you look for some of the real undervalued companies or ones with outstanding upside. Pickens has a pretty good history, but has also suffered some tremendous drawdowns so look before you leap on his suggestions. One he just mentioned that he owns is SD. The company has been hammered because of NG declines and rapid expansion. However they have acquired some excellent HBP acreage in those deals and could really become a great winner.

      There are quite a few opportunities in US energy right now. One that pays dividends is ERF. If the dividend does eventually get cut in half it will still be 6% on present price. Production is about half oil and that is a growing percentage as wells are being drilled and completed. The race is to see if they can get enough oil flowing to replace the depressed lost revenues from NG so that the div can be maintained.

      A somewhat spec company is MMR. Pickens owns a chunk of it also. The share price is hammered because of completion problems with a difficult well in Shallow Water GoM. Could be a tremendous winner if the structures they have identified can be completed for production. the problem well was flowing until MMS people required them to shut it in for three hours to move the rig away from the hole, would not restart. Now it is taking them a month and $30,000,000 to overcome the government ordered FU, maybe. In any case, if this works out it will somewhat be the equivilant of Spindletop all over again. Stay small but buy more on good news. Several other wells drilled to similar formations yet to be completed and the first one has special tight hole problems. EXXI has an smaller interest in these wells and also has excellent onshore development projects. PXP owns quite a bit of MMR and has substantial production of its own.

      Look at DMLP. Nice structure and no debt. Last distribution was probably outsized but still a nice opportunity for eventual increased production when acreage developed by someone else driling the wells.

      MARPS is a small royalty trust formed when Texaco took over Gulf oil. Now leases are operated by CVX. The acreage is in shallow water GoM and could become pretty interesting if the MMR program works out. Small float and anything big will move price.

      While I certainly believe that EOG is an excellent operator and doing all the right things, the company is overpriced relative to many others. Nothing worng except not a bargain.

    • OK I am sorry for being juvenile, hopefully we can discontinue the child talk and have a productive conversation.

      From reports written by geologist Art Berman it seems as if many (not all) of these shale plays are a shame. Companies such as CHK do not include the lease costs in their cost to extract per MMBTU, but this has been easily overlooked and papered over because of the huge amount of capital thrown at these shale plays. Then the shales never turn out to be nearly as promising as originally thought, and they are always directing attention to the "next big shale play". He goes on to say once the massive capital inflows slow down it will the actual cost of extraction will be easily recognized by the market, therefore forcing prices higher. It looks like those capital inflows will be coming to an abrupt halt for CHK now down 14% today mainly on awful earnings, things don't look so profitable there any more. I will try to post an piece by him one I can, I remember he liked the assets for EOG NBL and SU

    • Sure thing little cmengy, I'll take Gunlach and DoubleLines resources over the Yahoo message board troll. Have about 1/3 of my position in if it goes down 30% I will dollar cost average down and collect my dividends while I wait for it to rebound. I don't do short term trading and trolling like your self.

    • dumbstick,
      it was you who first decided to use corrupted user names in posts. It was juvenile of you, but I thought I would return the favor.

      Why don't you look at what Gunlach is noted for trading. He runs a fund primarily invested in bonds - DoubleLine. Has he ever had a losing trade or a bad idea. I don't have his records but that would be extraordinary.

      Pickens may be right about the bottom. Or it may go a bit lower, maybe to $1.75. Another $0.25 won't make much difference. The problem is that Pickens cannot know when the price will increase. If Pickens or Aubrey McClendon "new" what the price would be, they would have made fortunes being short from $7 or so. I believe it will be near $2 for at least the next six months, maybe longer. There are wells shut in that will be turned on (at no cost) when price gets near $3. If price gets above $3.50 again there are thousands of wells to be drilled to hold the acreage that the operators paid huge lease bonuses for upfront. Generally those will expire in 5 years. It is a ticking clock of drill it or lose it, writing off the $10,000 an acre that is being carried as a lease asset.

      Anyone looking to put large money to work in energy is combing over the CHK properties. They are having to liquidate the acreage as they cannot raise enough Billions to drill the wells to develope the acreage before the leases expire.

      Now, dumbstick, who you gonna believe? Some New York bond trader that can simply see that NG is currently cheap, Or the knowledgeable NG resevoir engineer who valued the SJT reserves - including the undeveloped reserves - at about $8 a unit when gas was $3.50. When the NG price increases about 75% and gets back to $3.50 this will be worth less than $8 as the reserves will be depleted.

      So jump right in there and be the huckleberry. It won't go to zero. But be prepared for a 30% price decline and maybe more. When the distributions get to $0.04 a unit and the price has gone to still overpriced $12, what do you believe the elderly will sell as the double dip unfolds and the CrammJob is telling everyone to get out? Holding this as you cross that chasm will not be a big hop for a huckleberry like you.

    • Resorting to the dumbstick names now, thats when you can be sure your not dealing with a mature or intelligent person, I already knew that when you still thought is was a great idea to sell short when you selling short to someone with a track record like Gunlach at DoubleLine. You asked for the proof, I provided it, then you call him a wonder investor and act like its no big deal. If it didn't matter why did you want proof to verify. I went long at $17, T. Boone Pickens said the nat gas bottom is here, but I'm sure random Yahoo message board troll cmengy has better insight than T Boone and Gunlach.

    • dumbstick,
      I'm still short the same position I've had for a few months. I expect $14 by mid June, heading to $12 or less by October. Position still nice and profitable from the short side.

      Still lots of chatter about how great NG will be in 2016 or 2017. Of course the chin wigglers don't explain how unprofitable it will be until then. Or recognize how fast increased production can come on stream. I believe the Pickens $4 prediction will be correct, just that he is a year early. but he certainly knows more about it than some bond fund manager that seems to have excited the crop circle crowd.

      dumbstick, I own the woodshed. Just checking to make sure the illegals are stacking the cords properly.

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SJT
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