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Sunstone Hotel Investors Inc. Message Board

davidbdc2001 48 posts  |  Last Activity: Jan 15, 2015 2:08 PM Member since: Nov 12, 2008
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  • davidbdc2001 davidbdc2001 Jan 15, 2015 2:08 PM Flag

    Dino,
    The best advice you can receive if you haven't previously invested in oil and gas companies is to simply wait.

    There are no "no brainers". There is no known bottom in regards to the price of any commodity. One of the most experienced and knowledgeable oilmen of our generation - Hamm - sold his companies hedges expecting $60 would be the floor and that was obviously not correct (I bought more ARP at $13.50 thinking something similar).

    The idea that anyone knows what the price will be in 12 months is a fallacy. No one knows.

    Wait until the price of oil stabilizes for several months. Short of a major geo-political event its not going back to $90 tomorrow. Better to invest when oil has spent several months back at $50-$60 and it is clear that the demand/supply balance is more in line. Buying prior to that is a bet - if you have money you can afford to lose ok. But realize that's what it is. So if you want to bet - then buy the most beaten down names - and buy calls as far out in the future you can.

  • Reply to

    Today 3:pm Jan 14 , Nat Gas up 10%, Gas up 5%

    by banach64 Jan 14, 2015 3:07 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 5:23 PM Flag

    With the unexpected inventory buildup a lot of traders decided it might be time to take some of their profits on the short side - it was several times larger than predicted - along with bad retail numbers - so some folks think this could be the kind of "terrible news" that would mean there just isn't too much more "bad news" that could keep sending it down.

    Not a popular thing to say - but we need some type of geopolitical event to move the price upwards a lot.

  • Reply to

    Would like see

    by jbcguy Jan 14, 2015 1:28 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 5:20 PM Flag

    JBC - Ok, so what do you project as our leverage with $50 Oil and $3 NG? I don't disagree that some drilling and operating costs will be reduced due to less demand, but I'd guess 10-15% in the short term. Even with those savings, we'll still be in violation of the debt covenants in late 2015 if pricing continues to fall.

    Short of another artic blast coming it appears $3 NG may be coming and stick around for a while.

    The issue we'll face in the drilling program is that the collapse of oil pricing has been all over the news for more than a month - the primary folks that put up money are small business owners, lawyers, doctors, etc - Yes, the tax write-off is nice but its going to be a much tougher sell this year. I'll bet a large chocolate milkshake that we don't hit 275 MM.

    As soon as its obvious that those debt covenants kick in, there have to be modifications and that will mean further restrictions on the business. I don't expect that there will be any purchasing of units by ARP.

    The earlier it gets addressed the better. We don't need a repeat of the 2008 conference call meltdown where Cohen blamed the whole world for the unit price decline..... when the whole world knew they had totally botched the hedges - twice. A quicker addressing of that issue might have meant we only had to sell one operating system instead of two!

    Rather see the distribution get drastically reduced for the next year and pay down debt and be in good position for a price rebound in NG and Oil, than to continue to send cash out and find ourselves between a rock and a hard place late in the year.

  • Reply to

    Land and Building take

    by andrew_wert Jan 9, 2015 3:29 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 2:30 PM Flag

    Yeah, Management should tell the clown to pound sand.

    I'm very disappointed to read the release that we are selling 5 more malls. You can't cut your way to growth and frankly, some of these malls have helped to build the company and are still generating positive returns for PREIT. The idea that hypothetically we can invest the money elsewhere and earn more money is just hedge fund BS. The guy only cares about boosting the share price THIS YEAR - he will sell and he couldn't care less about the company in 4 or 5 years.

    That's my comment.

  • Reply to

    Mis Information & Exposure

    by breakem1 Jan 14, 2015 7:11 AM
    davidbdc2001 davidbdc2001 Jan 14, 2015 2:26 PM Flag

    Hate to break it to you but what posted is just incorrect. I summarized the last management projections for 2015 in another post - if you choose to not believe it that's certainly your right. Good Luck.

  • Reply to

    Would like see

    by jbcguy Jan 14, 2015 1:28 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 2:25 PM Flag

    JBC - I doubt they can buy back units this year. If NG keeps falling and gets below $3 our debt covenants will require waivers at some point and the banks definitely won't allow available cash to go towards buying back equity.

    $4 NG and $50 oil - ok we survive but with much lower distributions and no new acquisitions for a while. $3 NG and $40 Oil and forget about much if any distribution. Less than that and it gets dicey.

    Figure the last two acquisitions are at best currently worth 50 cents on the dollar - that's a huge amount of value destruction in a short period of time - with lots of ongoing interest payments to boot.

  • Reply to

    Another day at the slaughter house

    by bigbear.2010 Jan 14, 2015 12:12 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 2:20 PM Flag

    so if you don't expect to get paid past April why not wait until that is announced and buy then.

    They are very tight on cash and liquidity.

  • Reply to

    Another day at the slaughter house

    by bigbear.2010 Jan 14, 2015 12:12 PM
    davidbdc2001 davidbdc2001 Jan 14, 2015 1:18 PM Flag

    BBEP may get much lower. They have zero financial flexibility and have to try to raise money - the last debt offering fell apart and I'd hate to see what they will have to pay if they go back to the debt markets now.

  • Reply to

    I give up.

    by bigbear.2010 Jan 12, 2015 3:47 PM
    davidbdc2001 davidbdc2001 Jan 13, 2015 6:02 PM Flag

    Yes, the CFO speaks third generally and near the end of his quarterly update will go over liquidity and leverage. You can look back at old transcripts.

  • Reply to

    I give up.

    by bigbear.2010 Jan 12, 2015 3:47 PM
    davidbdc2001 davidbdc2001 Jan 13, 2015 3:15 PM Flag

    Your right - I don't own shares - I own units.

    And I couldn't care less what you think.

  • Reply to

    I give up.

    by bigbear.2010 Jan 12, 2015 3:47 PM
    davidbdc2001 davidbdc2001 Jan 13, 2015 3:14 PM Flag

    They generally give an update each quarter and would expect it to be highlighted when the next conference call takes place.

    If not, then I'd expect the analysts to be asking them something along the lines of how things look in 2016 if prices remain sub-$50.

  • Reply to

    I give up.

    by bigbear.2010 Jan 12, 2015 3:47 PM
    davidbdc2001 davidbdc2001 Jan 12, 2015 9:54 PM Flag

    I don't understand why some here insist on repeating this mantra that ARP is "protected". We are not protected. Our projected leverage ratio was 3.5 for 2015 - and that was in October. You need to understand our debt covenants and the amount of revenue that comes from oil. When you look forward to 2015 it will get ugly very quickly at current prices. The market has already priced in a large distribution cut, and there is a small component of BK risk. I don't see BK as likely anytime soon personally, but one only has to go back to the fiasco of 2008/9 to understand why we trade at a discount to the sector.

    We have a lot of leverage and a good portion of our revenue comes from oil which continues to head south - what else could you be expecting?

  • davidbdc2001 davidbdc2001 Jan 12, 2015 12:58 PM Flag

    You better take a look at the COMPANY's Production guidance and do some calculations - I provided in a separate post - REVENUE will be split pretty evenly between NG and Oil/NGL's. That's according to their own guidance.

    So which do you believe? Some guy on a website or the SEC filings from the company.

  • Reply to

    future distributions? Help?

    by martmartymartin Jan 12, 2015 12:31 PM
    davidbdc2001 davidbdc2001 Jan 12, 2015 12:53 PM Flag

    The company hasn't released any type of sensitivity analysis so you'd have to make your own projections.

    When doing so you better go through the debt covenants and understand that once they are violated its no longer up to the company what the distribution (if any) would be.

    And finally, you should get your tax advise from a tax attorney. UBTI taxes exist even if placed in an IRA, the IRS is somewhat cloudy on the whole subject - the best advice I can give you is to be consistent in whatever you do in regards to reporting your MLP holdings. Different IRS agents will give you different answers on many subjects - so see a tax attorney.

  • Reply to

    APL declares distribution early

    by bosox_pats Jan 11, 2015 7:05 AM
    davidbdc2001 davidbdc2001 Jan 11, 2015 5:03 PM Flag

    Bosox - I don't believe they could legally do that. I for one would join a lawsuit if they changed the exchange from 1 for 1 to 1 for 5. I expect to hold the same number of GP units that I did under ATLS. Any change to take units away from current holders would be met with lots of fancy Cooperman lawyers (amongst others)

    The market simply no longer believes anything Cohen has to say. And throw on top of that this stupid lack of information about the new GP and you get severe discounts.

  • Reply to

    Oil Price

    by bosox_pats Jan 11, 2015 7:11 AM
    davidbdc2001 davidbdc2001 Jan 11, 2015 4:27 PM Flag

    Well, Saudi and Iraq slightly raised their Feb. Prices to Asia - though Iraq cut the price for the oil they send to the Americas and Europe.

    So perhaps there is a slight realization on SA part that the price is too low for them to maintain. BUT there is no end run. SA could produce another 2-3 MM barrels if they wanted to - so other countries would have to make substantial cuts - in the 15-20% range to impact world markets - no one will be the first to step up.

    SA has to change its mind for any real action.

  • Small increases, but both Saudi and Iraq raised their price of oil sold to Asia for February. That would be the first increase to any region since the price collapse started. Now Iraq also cut their price to Europe and the Americas for one of their grades - so its not like its "over".

    Saudi and Iraq raising their Asia price might be the first sign that the resulting reductions to national budgets is beginning to show an effect. Of course - it could also be a bluff by the Saudis to perhaps encourage highly leveraged firms to keep drilling in the short term..... with the idea that they go totally BK in the long!

    We'll see what March brings.

  • Reply to

    Gotta wonder

    by jbcguy Jan 7, 2015 3:57 PM
    davidbdc2001 davidbdc2001 Jan 7, 2015 5:48 PM Flag

    You realize we don't have a GP right now!! Yes, we are still technically part of ATLS, but ATLS is restricted from doing anything before the deal closes - and the new GP is just an idea floating around out there somewhere (and yes I know there are SEC filings).

  • Reply to

    $20 oil?

    by islandboy379 Jan 6, 2015 11:02 AM
    davidbdc2001 davidbdc2001 Jan 6, 2015 5:34 PM Flag

    I think that's a good idea. And this is one person that would appreciate it if you could combine your comments into one thread. Then you can compile your thought/ideas and we can have a board that is much easier to view and use. Thank you.

  • Reply to

    Collapse picking up speed

    by davidbdc2001 Jan 6, 2015 12:58 PM
    davidbdc2001 davidbdc2001 Jan 6, 2015 5:31 PM Flag

    That is simply not correct. I took a few minutes and looked at their daily projections for next year and took their projected sales price for oil and nat gas (both of which are going to be lower than when they did the projections - believe this was from Oct 13), and I used $30 a barrel for NGL's since that seems to be the midpoint of what they have been getting.

    The result:

    850K/day NG
    600K/day Oil
    130K/day NGL

    Now, I'm getting old but that isn't 75% NG.

    2013 actual revenue:

    186MM NG
    44MM Oil
    36MM NGL

    So you can see that we USED to be primarily NG - But Ed's "counter cyclical" strategic approach has led us to buying oil assets.

    Keep in mind that our EXPECTED leverage was going to be 3.5 - do some back of the envelop with Oil at $40 and let me know how that looks.

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