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San Juan Basin Royalty Trust Message Board

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  • cmeng cmeng May 3, 2012 12:20 AM Flag

    Weak hands

    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.

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