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Southern Copper Corp. Message Board

davidbdc2001 54 posts  |  Last Activity: Dec 19, 2014 12:36 PM Member since: Nov 12, 2008
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  • Reply to

    What is Driving MHG down?

    by robcrowley126 Dec 12, 2014 7:15 AM
    davidbdc2001 davidbdc2001 Dec 19, 2014 12:36 PM Flag

    We sell a commodity. All you need to do is look at a chart of salmon prices and we will basically move in concert with occasional divergence based on company news.

  • davidbdc2001 davidbdc2001 Dec 15, 2014 3:38 PM Flag

    What financials are you looking at?

    The margins on the drilling program are huge - its fee based and flows to the bottom line.

  • Reply to

    spinco now valued under $1

    by marklibera Dec 12, 2014 10:08 AM
    davidbdc2001 davidbdc2001 Dec 15, 2014 12:19 PM Flag

    I agree with the PXD statement completely and its the reason this unitholder was so upset about the purchase price (especially for ATLS since they basically owned the future growth).

    The whole issue about buying ATLS now is that TRGP only pays about 3% in dividends. So your truly betting on capital gains. Given the environment, TRGP could fall a lot more.

  • davidbdc2001 davidbdc2001 Dec 15, 2014 12:17 PM Flag

    I think you should read the whole filing.

    Do you believe they will raise $275MM through the partnership program in 2015? I don't.

    The biggest single financial news piece over the past month is oil price going straight down. Even folks that don't pay much attention are aware of the doom/gloom. Now think about who they raise money from through this program - doctors, dentists, attorneys, small business owners, etc. Think those folks want to fork over their hard earned money to drill for oil in 2015?

    They would do ARP a world of good if they would release a sensitivity analysis that went out 5 years at different prices of oil AND confirmed their debt covenants.

    At this point, a supply disruption somewhere in the world is about the only thing that is likely to trigger oil regaining some of the 40%+ loss from the past month.

  • Reply to

    The Way Out

    by bosox_pats Dec 6, 2014 9:20 AM
    davidbdc2001 davidbdc2001 Dec 8, 2014 4:04 PM Flag

    Because in the short history of ARP - we've had about three different strategies - 1st we were NG producer - then we switched to oil and liquids - then we became "opportunistic", whatever that is.

    We don't specialize in a commodity. We don't specialize in a process. We don't specialize in a geography. We just seem to specialize in chasing deals - and too often those deals are proving to be drastically overpriced (which I've noted more than once when the deals were done). The simple reality is that Cohen isn't the smartest guy in the room - he just thinks he is.

    And absolutely no one is willing to invest real money in a firm that can't even tell you what the legal structure will be next year! I can't even think of a similar occurrence by any company in any industry. Who thinks they can just say that some type of entity will be ARP's GP but they'll let us know in 6 months exactly what that entity will look like?

    The reason we are thrown onto the junk pile is self-induced IMO through management's constantly changing strategies and total lack of transparency. Are all oil related companies down - yes - are the all down about 50%? No!

  • Reply to

    The Way Out

    by bosox_pats Dec 6, 2014 9:20 AM
    davidbdc2001 davidbdc2001 Dec 8, 2014 11:20 AM Flag

    Bosox,

    Down but not a disaster? What do you call an $11 unit price?

    We are so far away from a unit price that would allow any type of flexibility and/or deal that its not even funny. $20 minimum. We are at 11 BUCKS!!

    Oil down 2.5% today and we go down 9%? At this rate when oil hits $60 we'll be at 3 bucks.

    I hate to say it because I lose too - but this has the look/feel of a total disaster. We are well beyond amateur hour into the simply sad territory. This is gross negligence. You didn't address my questions. Can you think of any example that is similar to our selling half of ATLS and telling folks that we'll figure something out for the other half of the business.... IN SIX MONTHS!

    Regards,

  • Reply to

    The Way Out

    by bosox_pats Dec 6, 2014 9:20 AM
    davidbdc2001 davidbdc2001 Dec 7, 2014 2:57 AM Flag

    Bosox,

    Way way too optimistic and you totally ignore the self-induced part of this collapse.

    No one is willing to hear management say that "they will figure something out" in SIX MONTHS TIME!

    Can you think of another example of a business basically selling half of itself FOR NO PREMIUM. And telling its shareholders that they will figure out a way to make the other half of the business into something valuable?? Oh, and they will also let shareholders know what legal structure will exist in about 6 months?

    This whole thing is amateur hour. A stated strategy of "we will be opportunistic" is laughable.

    Where is the sensitivity analysis showing cash flows over the next 4-5 years at different oil price levels?

    I could go on and on - I've been told a deal to refinance and extend about 150-200 million of debt fell apart this week. The way out is to get someone like Dubay to agree to come and run the firm and send the Cohen's off to one of their other entities to play monopoly.

  • davidbdc2001 by davidbdc2001 Dec 7, 2014 2:50 AM Flag

    I was told today by someone that I respect as knowledgeable, that ARP was working on a 150-200 million dollar loan to extend debt and the deal fell apart this past week. Supposedly this was fairly well known in the hedge fund world and the main reason for the fall from $15 down to $12.

  • Reply to

    Well

    by islandboy379 Dec 5, 2014 4:11 PM
    davidbdc2001 davidbdc2001 Dec 6, 2014 3:58 PM Flag

    Wow - I bought 5000 units at 13.50. And ARP doesn't pay me 250K or so to attend a few meetings a year and approve Cohen and son pay packages.

  • Reply to

    Insider buy

    by jbcguy Dec 3, 2014 5:43 PM
    davidbdc2001 davidbdc2001 Dec 4, 2014 8:39 AM Flag

    BFD.

    I bought 5,000 units at $13.50. Who cares.

  • Reply to

    Hedging

    by bigbear.2010 Nov 17, 2014 8:38 PM
    davidbdc2001 davidbdc2001 Nov 18, 2014 12:51 AM Flag

    They include full hedging positions in the financial quarterly reports. No need to ask - just look it up.

  • Reply to

    Merger math

    by marklibera Nov 6, 2014 3:57 PM
    davidbdc2001 davidbdc2001 Nov 15, 2014 12:08 AM Flag

    The cash you get from the ATLS transaction will be going to Uncle Sam if you've owned for any period of time.

    All APL and ATLS unit holders will suffer large distribution/income cuts due to this transaction.

    TRGP will increase distributions....... because they basically stole APL!!!

  • Reply to

    Taking everything into consideration

    by bigbear.2010 Nov 12, 2014 2:52 PM
    davidbdc2001 davidbdc2001 Nov 13, 2014 9:44 PM Flag

    Many MLP's hedged through 2019?

    Please name them. Thanks.

  • Reply to

    Taking everything into consideration

    by bigbear.2010 Nov 12, 2014 2:52 PM
    davidbdc2001 davidbdc2001 Nov 13, 2014 12:18 AM Flag

    Well the obvious answer is that the bottom is zero.

    How likely is that? I don't know.

    Folks here don't seem to understand what has taken place. APL was sold for no premium. Zilch. Along with that ATLS divested itself of all APL interests as part of the transaction. In my own opinion - APL was the solid part of the puzzle. The PXD partnership was golden and the assets were mostly well placed geographically. That is gone.

    What that leaves is ARP and some assets and some partial ownership of some small entities. So basically all that's left is ARP. ATLS had picked up some assets in the past couple of ARP acquisitions. But no where near enough to allow for much future growth. The units trade at a significant discount to what most people would value the assets as being worth. Why? Well for starters ARP on its own is going to be very limited in terms of acquisitions to grow. The new GP is really nothing more than ARP interests. ARP is a hodgepodge of assets with no clear strategy or plan behind them (and no - claiming that you "time" the purchase of energy assets isn't a strategy). There is no experienced operations executive. Oil and NG prices can fall much further than people think. Solar keeps making strides and while it isn't yet cheaper on its own than oil/NG it is getting closer.

    Oh, and ARP has a decent amount of debt to pay off. Look out past the next two years and what does ARP do if NG is trading at $2.45?

    The combination of APL and ARP together under the ATLS umbrella had advantages IMO - that is all gone and now they try to "figure out" how to save ARP. What kind of business decision is that?????

    I'd tell folks to simply value ARP as a trust and try to calculate its DCF over expected life of assets - BUT we all know Cohen is not capable of simply focusing on operations. SO SOMETHING - No matter how bad that something is - Something will be done. Its just no one knows what that something is - and given the track record - down we go

  • Reply to

    stock action

    by crl1603 Nov 11, 2014 1:54 PM
    davidbdc2001 davidbdc2001 Nov 12, 2014 7:11 AM Flag

    Well why would you expect the market to be impressed?

    We have solid hedges over the next two years. They claim expected coverage next year of 1.1. They also claim they will raise 275MM in the drilling program. I'll believe that when I see it.

    APL was just sold for....... NO PREMIUM, and we've gotten (and I assume will never get) no reason as to why. They have communicated nothing (outside of "trust us") regarding the new GP setup and how they intend to grow the business post the APL sale. Dubay was their best executive and he's now off to Targa (or retirement). The past couple of acquisitions were poor in regards to price paid. And Cohen has proven that he can take something good and turn it into something less than good.

    At this point ARP is considered speculative and there is a belief that 1. A firesale similar to APL may occur. 2. ARP will simply produce until its assets are expired or NG/oil prices greatly rebound and then sold.

    Very few people see ARP as an entity with any direction or strategy or future for that matter.

  • Reply to

    Results

    by rrb1981 Nov 10, 2014 8:53 PM
    davidbdc2001 davidbdc2001 Nov 11, 2014 12:14 AM Flag

    Realize that our actual coverage was 1.0.

    The best thing in the results that I saw was that they added some hedges. I think they should take advantage of the recent bump in NG and get 2015 to 90% NG hedged (if not 95%).

    I see little chance of achieving 275 million capital raise in the drilling program. In fact I'm assuming we just continue with our current distribution through 2015 if they intend to achieve a 1.1 coverage.

    Nothing great - nothing terrible in the report.

  • davidbdc2001 by davidbdc2001 Nov 5, 2014 10:29 PM Flag

    Just something to keep an eye on. Since the Texas regulators have said the ban is unconstitutional its likely to end up in court.

    This should be a wake-up call to the industry to be more pro-active around regulations for well construction, waste water, and chemical disclosures. "Average" people voted for the ban - IMO - largely because folks believe you shouldn't be allowed to put things in the ground that aren't disclosed to the public.

    Somehow the industry needs to do more around measuring things like methane before/after drilling and being totally transparent in terms of what is being used in their fracking processes.

  • Reply to

    Sell ARP and buy ATLS? Wash rule?

    by clrodrick Oct 31, 2014 5:35 PM
    davidbdc2001 davidbdc2001 Nov 3, 2014 3:12 AM Flag

    How about we just set up the new GP and let ARP and the other assets slowly increase cash flow and do the hard work of building a better and stronger business.

    I'm so tired of "financial engineering".

    ARP needs cash and can't issue equity at these levels - yes, I agree. So lets increase the size of the drilling program and use that cash flow to make a SMALL purchase that will provide further assets to keep increasing the drilling program over the years.

    Even if we increase distributions at ARP by a penny a quarter - after two years we'd basically be up to 23 cents a month. Keep paying that out and we'll see our unit price increase to where we have an 8-9% yield.

    A BIG part of the reason that Atlas entities are almost always undervalued is that EVERYONE knows Cohen is just looking for the next deal. Lets bring Dubay over from APL and put him in charge of ARP and start building a stronger organization and execute!!!

    Then in two years, with a $200+ million drilling program and slowly increasing distributions, and a higher unit price - IF THE SITUATION PRESENTS ITSELF - we make a larger purchase.

    Slow and steady wins the race.

  • Reply to

    Sell ARP and buy ATLS? Wash rule?

    by clrodrick Oct 31, 2014 5:35 PM
    davidbdc2001 davidbdc2001 Nov 1, 2014 12:50 AM Flag

    No wash rule.

    Before you decide to do it you should go back and consider why you bought ARP in the first place.

    I've always found with this kind of stuff that when I decide to "be smarter" - I usually end up on the wrong side of whatever happens.

  • Reply to

    bosox what do you think?

    by davidbdc2001 Oct 14, 2014 8:09 AM
    davidbdc2001 davidbdc2001 Oct 28, 2014 11:33 PM Flag

    That's stretching it awfully thin.

    Just as we can't issue ARP units now, Why sell APL and ATLS when everything is nothing but doom and gloom in the sector?

    Of that 9.12 cash I'm guessing the majority is going to Uncle Sam. So I have to strongly disagree with your $46. Its more like $40 and that's assuming TRGP remains at about $125. And that means we get no premium for PXD growth commitments, nor do we get any premium (I'm talking ATLS here) for being 6 cents from the highest IDR's at APL. I don't need Cohen to give me a new step up basis in TRGP - I could do that myself by selling ATLS and buying TRGP!!!!!!!

    TO me the whole thing is lunacy and if/when Cohen decides to combine ARP and what's left of ATLS we'll get hit again with a taxable event!

    Slow and steady wins the race and we got screwed by panic and being way too fancy.

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