The wells are relatively short on the laterals. Generally most monster wells of late have been drilled 2 MILES laterally, which boggles my mind. These wells are less than half that. Production per lateral ft on these wells looks good.
Just did a 5 year comparison between MHR and SFY...Five years ago $10k invested in MHR is worth about $410,000 today. Over the same period $10k invested in SFY is still worth $10k. The difference is in management. Entities like SFY exist for executives to have a secure paycheck and an easy 9-5. On the other hand MHR executives are in a hurry to build something, and stay in the forefront of the industry. This is why you see pictures Wolves Leopards, and Vipers on the website as these animals represent the aggressive nature of this organization. The SFY website should have pictures of Squirrels and Goldfish.
Boy trying to value a system that has a footprint in an area that could produce growth for a couple of decades...that's a tough one! Simply putting an EBITDA multiple on today's throughput could leave a lot of value on the table. Upton say's $1.5bil which come's to $15 million per pipe mile that's hefty compared to recent deals, like MWE and Summit. But how do you value ROW in an area that again "could" have double digit production growth for some time?
"The basic difference between an ordinary man and a warrior is that a warrior takes everything as a challenge while an ordinary man takes everything as a blessing or a curse.”
― Carlos Castaneda
Good Point fastball...Is this what you meant?
I was hoping you could explain this registration rights agreement. If you noticed MHR didn't sell 4.3 million shares directly. The shares were sold to institutions by three hedge funds that owned MHR shares. I believe that this transaction was used to avoid certain filings and avoid giving rights offering to all shareholders. But this transaction has me stumped...I'm assuming MHR is getting gross $30mil, for $7 per share, which the institutions are paying. And the hedge funds are guaranteed the difference between what the market price was at the time and the price sold...MHR basically sold a call on its shares at $7 (collecting premium) and hedge funds are guaranteed the market price at the time plus all the upside, if there is any? While its small in size, it does however highlight the current cost of equity capital. Less
I've now posted twice on this recent registration rights offering and yahoo deleted. I suppose Yahoo wants to segment the user base for advertisers of soda, candy, video games, and paycheck cashing.
When we have a thread with several well thought out post on a particular discussion. Why must another poster weigh in with a "pat on the back" to those posters and not have a thought regarding that topic, but a gltal? This is why good threads become sloppy and hard to follow.
Good thoughts on this thread. I think MHR can sell another portion of its ownership and still wield control. Strategically it wouldn't be a bad idea for markwest to buy 20% or so. Looks like the Mobley complex has current capacity of 520MMcf/d. If Eureka is doing 170MMcf/d throughput mostily shipping to Mobley that would amount to some 30% of the plants capacity.
The $30mil is less than a month if fixed cost and capex are added together. They said in the 10k that using the short form would be costly but tapping the private is at least as costly...It's pretty much well known now that an asset sale is needed.
Quick thought...The LP/GP structure remains in tact. However, KMP/KMI splits into 3 maybe 4 separate entities, Pipelines, Terminals, C02, and maybe Tanker and rail? I believe this will be the ultimate plan for management to get this elephant dancing. In the meantime I'll pocket the 5.2% yield.
I agree that here is a ok place to buy. However, given its size and diversity of assets it takes a lot of "heavy lifting" for 8% growth. Also, when the overall market declines this stock (considering the assets) doesn't seem to benefit as a "safe haven". I think Kinder's frustration is genuine, and he may engineer a plan to get the valuation to what he thinks is deserved...I would be cautious of the Mom/Pop investor buying because Rich is buying. He has a lot ($400mil cash dividends) of disposable income.
Agreed! An orderly market is a healthier one. The mo-mo players only bring on the market makers and the naked shorting. Like to see a nice ascending chart rather than a chart of straight lines that resemble 7.5 on a richter scale.
Due to last years late 10k filing the company is ineiligible to use SEC's short form S3. They can issue debt or equity to the public but have to file a S1 which the company says is more costly. Also they no longer have an active ATM on the preferred D shares. This has to be the biggest reason for the current cash crunch.
.First it's not just the past year's $87mil it's all cash expended since 2010. Second return isn't "revenue stream" but discounted cash flows. They applied for a bank credit facility over a year and half ago but still don't meet the metrics and have to pay 12.5% on a $50m term loan secured by half a billion in booked assets... Absent in the 10k is key information such as revenue recognition or what rate is charged to move product. Key question because ....
I'm doing this...for you to fill in the rest, it's clear you know everything! Less
It doesn't take sharp analysis to see that the cash hog is Eureka. The throughput growth is awesome but the cash flows aren't enough to even dent the expenditures, even as they put Trans-Tex numbers in to pad the segment. For the year net Eureka Capex was $87mil of that $40mil in the fourth. In 2014 the Eureka budget is another $90mil while Williston is only $50mil. That's a big Capex reversal between the two segments. Gary said in the past that he wants 20x ebitda for the business. Since then interest rates have begun to hike, so I say give me 2015 throughput projection make it 15x and lets call it a deal. Otherwise its just a matter of time before an analyst puts out a report questioning the value of Eureka.
Thanks Usar Those are a couple of tidbits I did not know. I imagine that after drilling into the deepest of overlapping zones the lifting costs of the next two zones reduces dramatically...Alaska would be one heck of a prize. In the meantime I'm hoping for some good old fashion cash flow...Have a good one Sir!
I'm not sure a well producing 200-300Mcf/d is worthy of a big market response but I do appreciate the PR nonetheless. Hopefully the cumulative affect of the new producing wells puts the company back into a growth mode. It helps that the comparative base is low.