A report from KLR Group has pegged the breakeven costs for various oil and gas plays around the United States. So its breakeven rates, meaning 0% return on gas drilling is Fayetteville $3.70, (10% return there requires $5.50) Dry Utica $3.65, Haynesville, SW Dry Marcellus, and NE Dry Marcellus all at $3.50. And the lowest cost is SW Wet Marcellus at $3.25. So according to that report, all plays are losing money below $3.25. Seems like I heard something very similar not too long ago.
They did that because they expect the revolver to get cut and they might be in a deficit and they had to get a waiver as well. You have to see how much the revolver is cut to see the effect it may have. If the revolver is not hacked to pieces the stock could be the first to orbit Saturn.
Another way to describe it is that they were being very conservative with the accounting and people expect the worse. I don't expect the worse & I doubt they do either and I don't see them shrinking away from an opportunity. If somebody was able to take possession of your new car and was selling it for $100 and you had cash what would you do? Let somebody else buy it? ARP does not have authority to dictate what people sell its bonds for but the bond market speaks for itself somebody made a 70% return on the bonds that were sold one week ago for $0.08 I sure hope it was ARP.
I know they can raise their production and I think they know they can too but the market expects production to keep shrinking. That's an easy expectation to have as everybody else is shrinking production and some by a rapid pace. The market believes they will never buy back the bonds because so far they have bought very little. I think that is pure ignorance not only of what has been going on at ATLS./ARP and their covenants along with their desire not to be an open book.
Its the same thing as Rosneft paying a dividend for Putin/Russia which needs the money. ARP paid and the money went to ATLS which was heavily in debt. He ain't heavy, he's my brother.
We went from bond vampires to fast money that can understand accounting statements. Yep, there is a fortune laying on the sidewalk here. Welcome to the biggest yard sale I have ever seen.
All wells that ends well. I have not forgot the poor hedges many years ago nor selling off Elk city nor the S. Texas purchase that didn't work well till it was sold off along with the rest just before prices fell off a cliff. They make mistakes but make more steak out of soup than anybody I know.
Yes, I was mistaken about the sale to Chevron. I complained about the premium when it happened till the price of nat gas went for $14 to about $4. About the best deal I have ever seen.
The average poster on this board doesn't know the difference between ARP & ATLS and are only momentum players, punters and or scam artists. Giving them more than the Cliffs notes version of history is overkill when they don't even bother to read the SEC files. Somebody at Bloomberg writes about the Ed's pay and they automatically write about lawsuits figuring ARP paid them the whole thing in cash. Everybody has an angle.
His son made $70m too so there is $140m pretax. Can buy a lot of bonds that were selling for as low as $0.08 when the herd bolted.
I don't like estimates either but its the way it is. I took the time to try to explain this to oilguy as it pertains to ARP but he prefers conspiracy theory. In a way I do too. I believe the 800,000 barrels a day of "missing oil" is a combination of oil that doesn't exist along with understated demand from non-OECD members. I doubt we will ever know. It a mystery of the biz that is as old as Texas.
The whole industry uses estimates from the IEA, EIA to the TRC to ARP. Oilguy is just ignorant of the whole oil and gas biz and has a chip against Cohen. This stock collects crazy people just like D.C does.
I would like to add that they had the foresight to unload APL at a great price as they saw before others the coming price declines in energy and one of their top suppliers for the pipeline system was Sandridge who got slaughtered. Volumes are draining quickly.
Ed Cohen did the same thing a few years earlier by selling near the whole company to Chevron as he saw the coming collapse in nat gas prices before anyone else dreamed of it. He has the best crystal ball in the biz.
Nearly all of the money came from the takeover of APL paid for by TRGP & NGLS. Ed Cohen & his son got rich from the takeover premium + change of control + all the shares vesting. They did the same thing just a few days ago when REXI, the Cohen's REIT, was bought out. Both are going to get another huge pay check from whoever bought REXI at the top of the trading range for the last 5 years. They are making Warren Buffet look like a slacker yet this board is filled with ignorant scared fools who think they just fell off a turnip wagon and will fiddle while ARP burns.
The money that actually came from ARP-ATLS was $375,000 cash for father & another $375,000 for the son, if memory serves, me plus a lot of unvested shares that are worth near nothing currently. They get nearly all their pay in equity which is why they are not going to be so quick to let common shares go under IMO. The value of the ARP shares at the time they were granted (they take 4 years to vest) was around $1.7m each as I recollect. See the ATLS 10 K if you like facts over jealousy and hysteria. Their pay is well aligned with shareholders which is what i like.
This was on Bloombeg btw.
Seems like just a few weeks ago justanoilguy was saying to sell ARP & ATLS because REXI was a scam. Better keep him away from bridges for a while.
He is God's clown on the ARP board. He lost his kids college funds on ARP and now is on the pipe and whines like a stuck pig.
Goldman predicted a nat gas rally this morning with a 50% price increase but I guess they are grasping at straws too.
Eddie said $3 NG is catastrophic for all E&Ps but I agree with the rest.
This heat spreading to most of the country should help the nat gas demand a bit. There are predictions of La nina too. US airlines are buying used inefficient aircraft from places like Malaysia and Russia and that should help boost demand too.
The said they expect the ARP revovler to be cut and ARP will sell hedges to repay the deficit. With low energy prices (after hedges are gone or lessened) combined with sinking production, which they expect to continue, ARP's EBITDA will be too low to meet covenants for the rest of the year. Given all this and ARPs high debt they expect ARP to have to restructure
.It is the same fears the market has for ARP. I am surprised they didn't expect and Al Queda bombing on ARP, guess that's the next downgrade.