-Guidance was reaffirmed....July was pegged at 6600 boepd, exit rate at year end is guided to 8,000 boepd.
- Significant increases in 2014 in proved reserves with that amount to increase with S. Jourdanton.
- Significant increase in well inventory and the inventory consists of highly predictable results and good IRR wells.
- An additional bolt -on to Dilworth soon to be announced and it was confirmed the largest portion of the acquisition has already been completed.
- Last high LOE cost (Duvernay) to be divested).
- Approximately 80% hedged to protect IRR and lenders....so oil price fears are unfounded.
- Anticipated additional rig but not yet BOD approved...I'd say 100% odds of being a done deal.
- The 100 day and 200 day SMA...is still in uptrend and I fully expect they'll stay in uptrend.
Now for anyone who wants to say AXAS is stagnant...predictable or isn't in a growth / turn-around..then look at the two year chart...if you are still of that opinion...then you are just dumber than dirt. I maintain that AXAS is just beginning to their stride and cash flow is about to grow significantly. So my wager is still in place and will remain so. JMHO GLTA
date and there is a good chance of an update on the Dilworth add-on and possibly comment on an additional rig. One would think with the all the south side Jourdanton inventory and an add-on at Dilworth (described as a high multiple factor of the existing acreage) it is more probable that a rig will be added. As is AXAS is performing above expectations, the 100 and 200 day SMA's are solidly in uptrend and the RSI is around 60. Bottom line is we are looking good going into what should be the strongest quarter yet with a good chance of Q4 be guided even stronger. I'd like to see the update before I leave...but if not...I'm not leaving worried about AXAS. JMHO GLTA
or rally the market in general. However in general, good solid performance generally holds up even in adverse market conditions........so this is now about the 4th qtr of repeated over-performance on the AXAS turn-around story and I still see no reason that it doesn't only continue but fully expect further acceleration based on the most recent guidance on both production, acquisitions @ Dilworth and planned divestiture of Duvernay. For me it's just a case of loving the micro story more than fearing the macro environment. So we maintain the status quo.......holding pat. JMHO GLTA
overly concerned about current gyrations in pricing. I would suspect there was a lot more in depth due diligence on the recent sale. With Cat Eye's being the first well on the South Jourdanton and even longer laterals being drilled on the south side...this old man ain't about to cut and run. They are increasing proved reserves, holding most acreage by production...increasing well inventory substantially..and a near double on year over year production. I hate to see the market toss out babies with the bath water but the market does what it does. I just have to look at the fundamentals of the company and it's strategy...and I can't find cause for selling.....so I ain't. If they destruct the price far enough...I'll most likely just wade into deeper water....I've never drowned yet. JMHO GLTA With decent macro environment we would most likely have $7 behind us already, but it is what it is.....so it's patience and fortitude at play for now.
carrying the largest handicap. They are highly regulated, they aren't organized in any means to constructively impact pricing and or production levels. Most Opec countries aren't in a highly regulated environment and they can control production to impact global pricing to include lowering prices. Russia is more or less Putin Oil Incorporated and he can pretty much dictate production levels and price discounting at his discretion. Keep in mind the US currently still bans the export of crude and only allows refined products to be exported. So in my opinion US producers are between a rock and a hard place. I have no confidence in the ability of US to do anything until it gets to a crisis point. That seems to be the American way...no foresight whatsoever...just wait for crisis to develop then use hindsight to establish a two way blame game.
Ask yourself this simple question. Post the the OPEC oil ban that all but crippled the US, where and what is the US National Energy policy ? We are no more prepared to handle supply excesses than we were supply shortages...in oil or natural gas. Now if other countries dump wheat or corn, you'll see US reaction but oil or natgas is just allowed to go boom or bust. Bottom line,.once again the health of the US energy industry is and will remain at the mercy of global players who play by different rules. I'll reiterate, watch the job losses mount as prices decline. If lowering prices is a ploy to hurt Putin...it's a fools folly that will only hurt the US. I don't know how this will play out other than it will be a cycle. The question is more to the magnitude of the cycle because we are in the stages of at least a minor cycle at present. What irks me is so far the decision is in the hands of Opec and Russia as to how the the game ends...kind of like being in a three handed poker game...paying ante's and blinds and never getting dealt any cards. Protect US interests,restrict imports of crude and lift ban on exports. JMHOGLT
Can AXAS pull back further...yep. Will it ? I really don't know. I do know that many E&P's and oil service companies are already beginning to hurt. Rigs are beginning to get parked, HERO for example which has the largest shallow water fleet is hitting new lows and still parking vessels. In my opinion we are seeing a typical cycle, not a major cycle but we're seeing a little correction action between supply and demand. As many know, I'm a contrarian investor so cyclic pullbacks are opportunities in my world. When the herd hates them..I buy them. In my view AXAS has put itself in an excellent position even if there is further "moderate" pricing pullback. One need's to look at the balance sheets of a lot of the E&P's to really appreciate what AXAS has done in regard to lowering debt, lowering LOE and growing production. The E&P's who have bought lease positions on large acreages (100,000+), will be hard pressed in tough times. The failure that generally occurs is that a company gets over aggressive when it appears prices look good going forward, they over-pay in a competitive market, their debt ratio gets way too high and then when prices turn down they are faced with high debt load, high LOE and can't fund drilling. It's not uncommon in any commodity to see producers sell more product cheaper as they attempt to pay the bills...but it's always a losing game. AXAS doesn't have to drill intensely to maintain BOEPD, they are low debt and they are adequately hedged.
$10 million dollar wells ....is there oil yes but it's an expensive process to get it. If oil prices fall much lower you'll see rigs get stacked like crazy. Lest everyone forget that even with $100 WTI and around $4 natgas many E&P's are already struggling with debt loads and low earnings. Further erosion in pricing will just strengthen AXAS's position as being a healthy E&P and it'll knock out many borderline players. It's a market and it's cyclic....I maintain AXAS is well positioned....a great balance sheet clean-up...so even if things were to get tougher they have wisely put themselves in much better position versus two years ago. But back to the initial point...if prices fall much lower...you'll see production fall off in fairly quick order. It's cause and effect. JMHO GLTA
I was a little disappointed on the size of the Dilworth lease...was hoping for something larger. I haven't had a chance yet to look too deeply into any of my holdings...I never check quotes while on vacation...besides just catching weakening oil prices in the news let me know to not dampen my vacation by looking at an E&P heavy weighted portfolio. By the way...IF THERE IS LULL FROM THE SUMMER DRIVING season it wasn't witnessed by me. We did a little over 3,500 miles and there's boo-koo traffic alive and well on the highways.
Good to be back.....now I just have a lot of catching up to do after two weeks of self-imposed market blindness. JMHO GLTA
I own some...and most likely will own more. I always buy in incrementally so I'm debating a little myself on whether to pull the trigger on more. The trouble with downturns for a contrarian is everything goes on sale at once....I got the money...but there's a fire sale on every aisle and right now there's some beat downs taking place. I did just get back from vacation and seeing some of the carnage...discipline is telling me to hold my horses...get caught up and buy disciplined. So I'm in a mulling stage right now as to not only where but when to do some buying. I'd rather miss a market upturn than miss a market downturn...for example say you own a $5 stock and it goes up 50% to $7.50 then came back to $5 ...awwww..you missed it. Now say the same stock at $5 falls 50% to $2.50 and then comes back to $5 ? Well in the first instance you missed a 50% gain and in the second you missed a 100% gain assuming you bought at $5 and sold the peak high or bought the low and sold at the recovery. So that's why I prefer buying "lows" and then being grateful to just get back to fair pricing..anything else is gravy. So just being back in action one day..I'm being a little cautioned and disciplined and trying to time this sector pullback right in regard to micro and macro events. It ain't always easy...but I sure have fun doing it. JMHO GLTA
tank of manure.....time will reveal the outcome. Ahhhhh investing can be so much fun at times. Hope everybody does well with their strategies. GLTA JMHO
wells being connected to OneOk's system which has plenty of capacity. I believe the number was an additional 6 wells coming on production before 3rd qtr end. Dilworth is about to grow inventory in a high multiple of it's current size with the largest portion a done deal already. How big ? We'll soon see. LOE costs dropped and the last high LOE was identified as Duvernay which is on the plate for divestment. Guidance is still an exit rate of 8,000 boepd. Now Poc is better schooled in hedges and derivatives but I did use to hedge nat gas as a buyer for a national company and although I didn't handle the accounting end...my experience is when you hedge....at say $90...if oil goes to $100 you missed out on $10 a barrel versus had you not forward sold your production...and you take a non-cash charge on that equivalent amount. If you hedged at $90 and oil falls to $80 you realize a $10 a barrel premium above the market price and you see a non-cash realized gain. The whole reason for hedging is not to gamble on market prices but rather to insure you get a price that meets your hurdle rate on IRR and also to meet requirements of lenders. Who can risk drilling a $10 million well with an IRR based on $90 oil and be left open to losses if oil fell to $60 ? Farmers hedge their crops, and almost all major suppliers and buyers hedge theirs supplies or needs in almost all commodities. The average investor puts far too much emphasis on short term swings in commodity prices as the only ones making money are the commodity traders. AXAS is hedged to protect IRR and to meet lender requirements...production growth is fabulous and guidance is solid. I'm long term...staying long term...2nd qtr CC provided all the confirmation I was looking for. JMHO GLTA
standing pat...added some shares but what can I say...I like cake. We'll see how the numbers shake out. JMHO GLTA
From Q2 2012 CC
I'm just an investor. I've got a series of questions. With all due respect to you and your decision-making process regarding Mr. King, you're the new CFO, I know Davidson College is an excellent academic institution where he went to school. He's got a degree, it says here, in economics. But he doesn't appear to have an accounting background. How does his background as a chartered financial analyst with approximately 10 years experience qualify him to be the Abraxas CFO?
Robert L. G. Watson - Chairman, Chief Executive Officer and President
I think Jeff is very qualified. He's very knowledgeable. He's very sharp. He's been in the small cap E&P business for a long time. We're structured a little bit differently, and I think it's the wave of the future. Accountants tend to look backwards. Financial people tend to look forwards. And it's somewhat rare for an accountant to be a successful CFO. So we have a very strong Chief Accounting Officer. He reports direct to me. The CFO is just going to be a capital markets type guy, and that's what Jeff's been doing for 10 years. And that's plenty of experience for what I was looking for.
CC transcript available at SA.
Anyone who can forecast another 25% downside by year end is either a fool not to short or a fool who is short. It's one or the other or just another investor who has vision without conviction. JMHO GLTA
so they could short more shares at higher levels. I on the other hand believe WPRT is a bargain at these levels and I certainly could care less about any shorts monetary future. The smart shorts took positions when WPRT was above $30 and in a market creation and spend phase. So the shorts now trash talking are the bottom of the barrel Johnny come lately's. You short the the over priced early risers...you buy the undervalued growth. As stated...I couldn't give a rats behind how shorts come out.......I care about about one investor..ME.
I bought F under $2, BAC under $5, FB under $19, and these clowns don't think I heard the same old rhetoric on those investments ? I think WPRT's a great risk versus reward.......so I'm putting capital at risk and expecting reward. If shorty really believes his thesis...then load the boat. If WPRT were to fall further that just gives me a lower cost basis entry on something I like.....if shorty makes some chump change on it...doesn't change my thesis or eventual gains in the least. JMHO GLTA
and I'd be jumping up and down over what ? Everyone's excited because some SA author says AXAS is worth more than current valuation ? Duh..
Kuddo's to BK for for doing the deal.....maybe when folks in DC realize how capitalism works...they'll quit over taxing and over -regulating....but then again they would lose their massive bureaucracies and they dare not let that happen. Now that's something I'll jump up and down about. As for AXAS...ain't never been nothing but "money in the bank" since I bought in...and expect it to remain so. JMHO GLTA
What in the world are you referencing ? if 13 and 10 are representing 1000's boepd...quit smoking dope it distorts reality. Guidance is clearly stated in the SEC filing and is still pending a revised upward guidance which should be good. The reality is 1st qtr boepd was 4,189 and 2nd qtr was 5,000. Mid-point was projected to be 6600. Lets just see what the real numbers are for boepd for 3rd qtr and we'll get the real McCoy production guidance for 4th qtr. Once we see what 3rd Q is and 4th Q looks like then we can see what the yearly average looks like. From the start of year it looked like a 4,5,6,7 ...we got the 4,5...now if we get 7,8 or maybe even an 8,9. Just add the 4 qtrs what ever they are and divide by 4. Such as actual 4,189, actual 5,000, guess of 6700, guess of 7,800 = 23,689/4 = 5,922 yearly avg.,which is almost a 50% gain. I'm hoping they beat that but I'd settle for it. If they exceed an 8,000 boepd exit rate...then next year could be another stellar year for production growth. Next year could be an 8,9,10,11 or better if a rig is added.. AXAS is small they are drilling good wells at predictable rates...they won't blow the roof off of production without adding numerous rigs. JMHO GLTA
on pps since June. It's a sector pullback and it followed oil prices. I don't have a crystal ball and I can't forecast where oil prices will go. I can forecast however that AXAS is sufficiently hedged on oil that I don't have fears of $60 oil. If oil prices recover upwards investors will feel better about buying the sector but in reality for most oil companies the majority of production is hedged and pricing swings don't mean all that much, hence the reason they hedged to avoid price risk. If prices stay low for very long periods such that the hedges expire, then yes,that's serious trouble and that's what happened in natgas a couple of years back. AXAS boepd is heavily weighted to oil, sufficiently hedged and they are growing production. So on the macro view investors at present are shunning the sector on weak oil prices and just overall economic concerns. It still doesn't negate the micro story AXAS is achieving. I'd love WTI to be over $100..not because of what that would equate to financially but more to what it would mean in investor enthusiasm. If I recall correctly I believe Poc ran the numbers and AXAS will actually see around $7million non-cash gain versus prior periods because oil is now closer to their hedge price instead of being way above it. The bulk of investors buy more on emotion than education. Watch almost any IPO to witness what emotion can do in regard to pps. In simplicity AXAS is in my opinion a beauty queen on a stage where at present the lights have been dimmed. When the lights brighten and they're putting lipstick on pigs because everyone wants to own oil stocks...I'll still have my money on the beauty. I can't predict where oil prices will go, except that there are economic bottoms that put the brakes on falling prices where price is less than production cost. I think oil is more apt to rebound than to go much lower but who knows. I didn't invest in oil prices, I invested in a turn-around story called AXAS and it's a good one. JMHO GLTA
It's all about the numbers and we'll soon be getting 2nd Qtr results and guidance update going forward into the 3rd and 4th qtrs. Short term traders are going to trade the macro concerns with the global events and the concerns with the US market.....that however has no impact on the actual results AXAS will achieve on production and earnings. I really don't see macro concerns easing much but I do expect 2nd qtr results on AXAS to reaffirm confidence in the growth story. But until earnings come around I wouldn't attempt to forecast what will occur....I've been focused on latter year results for some time and I still see no reason to alter my expectations. JMHO GLTA
market concerns, oil prices. I would expect that once released this quarters numbers will get the focus back on the micro (axas growth)...that story isn't going to end....it might fade as world events overshadow it...but the growth story is intact....and it will continue to keep increasing. We'll soon be getting the numbers and the guidance...and I fully expect it's going to remain on tract for yielding a superb year for AXAS and long term share holders. JMHO GLTA