Bidding war based on what? Multiple bidders based on what? Rumor you say, what is the rumor? Is that it, that there are multiple bidders (or were)??!!! GE said that 3 weeks ago..........4 paragraphs and nothing said..........????
Agreed on our NG hedges and I love that part of the strategy (apr-sep heavy hedging). That has been a key positive.
On oil, I agree with first part of point that no one predicted this rout. But on the hedging he made a mistake. He levered us up (I was good with that since Uinta is nice asset) BUT he could and should have hedged out 2 years oil around $90. Key reason - oil was fairly valued and Uinta coins money at $90. I've posted more details previously. I am well over and past that and like the current plan, but it does have risk ($2 NG).
IMO, the current UPL low price factors in the lack of oil hedge regardless of whether it was a mistake. UPL is strong buy imo and my #1 holding as I added 6, 7, 9,10 and higher (yes long suffering long).
Lastly, what would really help is a rollover in NG production(I see it coming, but not sure when) and a solid demand thru late summer, fall and early winter, to allow Watford to hedge 2016 apr-sep which would put liquidity fears to rest imo. Recall on NG pricing he said $3.5 is what he sees in 2016, so with current 2015 hedge at 3.71, I am sure he would hedge 2016 summer around $3.5. Recall that would put us near cash flow breakeven which would be huge as we have some liquidity, but it is tight. That is why sustained $2NG is risk
The plan is straight forward and simple. Drill smartly, reduce costs, keep position as low cost / mcf leader / top 5. Slow drilling on lower price, hedge some at good NG and grow.
Mistakes have been made on hedging and they are over leveraged. Nothing but time can cure this as NG * volume produces their cash, so with NG below $3, cash / revenue is down.
They are at risk, but on cc, Watford insists they can manage the debt. I believe they can, but every single E&P CEO either says that or does NOT say anything. Some will clearly not make it. UPL should, but no guarantees. Risk reward is great here. $8 downside, $22 upside, aka roughly 3x1.
Ouch for us longs. We are in tough shape now. I am holding, but am evaluating as GE is getting worse, not better. He is going from OPUD to not delivering at all.
So we were supposed to have two deals per the MHR earnings con call and we have one LOI and no news whatsoever on the pipeline. Add to it, that we are now in the midst of a huge stock market selloff and oil at 6.5 year lows! Bids may be withdrawn, lowered, etc.
Our only silver lining is that NG is holding up fairly well. Rollover of NG production continues to draw nearer and we are two weeks into and thus 2-4 weeks from turning the JV LOI into an actual agreement IF we can believe the timeline laid out (aka, the disclaimer was there is no guarantee of an agreement), so we have a worse situation in the E&P space and we need that deal done.
I upped the order tonight to .925 as I would like to get those shares back.
What is funny to me is how people never run out of words, but often run out of buying power.
So I was right on when I said the LOI was not an agreement. Now I have BP and added once and hope to add again tomorrow. At this point, I'll be back in those shares at .98 with commissions. Now I like that, since the LOI has a time frame and everyday brings us closer to (I hope) an actual agreement. You've got to try to trade around Gary a bit and use his words to sell, but get some BP back so when he overpromises, instead of being frustrated, at least you can add a bit on the cheap.
Hopefully I get filled and we get some pipeline news. I am definitely NOT expecting an agreement (that would be awesome), but my expectation is he say agreement and we get LOI or similar. The key will be the price or price range.
Your biggest mistake it interacting with him. We all have him on ignore. I like your comments even though I roughly agree with 75% of them. Good exchange. But his is 100% rubbish. Ignored him long time ago and don't look back.
Neil, Their NG hedging has been spot on two years in a row (kudo to Watford and should be acknowledged).
Not hedging oil 90-100 range (with 20 diff, 70-80 net) with production that they knew was 40-50!? Agreed was inexcusable. But that is done and that is why we are at $7 instead of $10. The market has factored this in. You will likely get onboard at a slightly higher price and be better of then us long term longs. But to drag up non-hedging of oil which is a year old issue is missing the opportunity imo.
My long thesis:
- Oil waterflood. Test proceeding on course. Results YE2015/early 2016. Upside.
- Oil back to $60-70 range. Upside. If waterflood and oil recovers, we are back huge. Recall they didn't complete 20 wells, so we are one of the few that are saving barrels. They can turn those on any time, but won't at 40-50. Good management.
- NG. HUGE upside and why UPL is my #1 holding. We are one of the cheapest NG producers and the only one in the west of the top 10 (ok, maybe 1 or 2 others, I didn't look at the list), but most of them are Marc/Utica producers. We have $1 differential on them. So if NG gets to $3.5 or $4, we will net $3.25-$3.75 and cash flow piling in. East will be getting $2.5-$3. The low cost producers will do fine, but others will still be hard pressed to be cash flow positive.
- NG Bull case. Pure NG production has peaked or is peaking everywhere except Marc/Uitca and likely to slow significantly there (MHR zero cap ex/no cash), many others cutting capex 10-50% and still keeping production flat (but for 6-24 months by pad drilling, core of the core, and better techniques). The only sustainable is techniques. High decline rates will catch up. As importantly, and not really talked about - ASSOCIATED GAS. Last time NG was $2, oil production was increasing and associated gas took all NG bulls by surprise. Oil rigs cut in half from Dec, so Dec 2015, associated gas rolls over. The rise starts soon.
Sentiment: Strong Buy
But NES has been battered too and they are highly levered to Bakken. So small pops aren't significant. BTW, NES already had a 1-10 split, so $1 at current price is .10 at original. Yes, I lost money there too, am out, but watching it and may re-enter at some point.
Speak for yourself. I am not nervous, but shorts are in control and making a ton of money. they are not nervous, but will cover like they did on the JV earnings news (one day pop until Agreement turned into LOI) and we are right back down.
Shorts will clearly give back some gains if we get a good price and pipeline sale, but in this market, if we don't get a sale and a good price, we follow HK and SD to the half dollar price range.
Long and strong, but I guarantee the shorts are feeling better than I.
Well, I added at $1.02 and another order at $.90 to add. I had sold 30% of my .90 buy on the run-up day, so added half those shares back and looking to add again at .90 if it gets there (it shouldn't, but still a rough market).
I wish I had been wrong, but OPUD as techsmeck says is Gary instead of UPOD.
One is noted in earnings release from Steve Turk,
multilateral results, including the Rusty 2710 long lateral,
drilled for $1.8 million per lateral with a 30-day IP rate
of 1,646 Boepd, strengthen our commitment to develop
this important technology.
So Jimmy any techs to help guide us? My gut says this is hanging in well today with mkt down, E&P's down and after huge move yesterday, but would like to know technically what is up and what levels to watch.
Exactly jms/techsmeck. But these move-on people, I just put on ignore. We follow and do more DD than them and they want what they want and they don't want to hear what it really is. They have their opinion and I won't waste much more time on them.
Thank you both, specifically jms for sharing your DD, as it is most helpful to actual longs who want actual info and exchange to make decisions!
It is what it is. We gave back some of the gains from yesterday as this is an outline and not a deal.
If everything tracks and we get a deal in 2 months, then we can celebrate, but be careful and use weakness to add IF you believe the deal gets done larger as outlined.
I won't correct you and get in a war of words. You have the positives right, but you are missing/ignoring the negative facts.
You are new here, I have been here for years. I don't post that much, but when I do, I want it to benefit everyone, but mostly those in the same boat (in this case MHR longs).
For what it is worth, I hope I am wrong. I hope the market lover the LOI and the stock moves higher. We'll know shortly.
Lastly, I didn't say sell this news (I am holding). I am just ticked at GE. He should have said we will publish a LOI this week and been clear on expectations, since this miscommunication helps the shorts and hurts us longs.
Sentiment: Strong Buy
Correct, but see my other post, in that we have no agreement yet and have to wait. IF this was a definitive agreement, I would be wildly happy, but that will be 45-75 days from now.