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.
The problem with selling as much PDP reserves as they have over this year is it strains the credit facility. Having reserves in a non-core still gives a certain degree of flexibility to leverage and prove up the core. As of now the revolver is too small given the resource base. And I hate to sound like a broken record but if/when they sell Eureka on a per $1 basis the market will give back ~$1.50 in market value...Just my opinion
t0b00t has been pounding the table on an MLP spinoff of Eureka. Respectfully I disagree. Instead I'd rather have that cash go to Gary Evans so he can drill in the Utica and Marcellus, where the ROR is probably 5x vs. the spread that the pipeline operator gets. I just think a high growth Marcellus/Utica E&P that's rich in resource and cash would garner one heck of a valuation.
Just the timing of the change has me leaning heavy in the direction that they just closed a deal major enough that when announced is going to make Q4 an after thought. So might as well take care of the announcement and Q4 conference call and continue on...
It all comes from 2 maybe 3 individuals whom occupy a combined dozen or so handles. Every now and then I'll drop in and see if there's any insight. Nothing! You can actually become stupid reading this board.
No bank debt and they paid off the last note. They recently took on a $1.5mil loan to buy commercial prop. in SD. The loan is backed only by the property. The firm has almost no leverage. You may notice a large working capital deficit. This is due to the turn-key accounting. The firm books revenue when investors sign on for the drilling program. The TK revenue is a liability until the firm drills a well. As of SEP "deferred turnkey revenue" was $7.2mil. The TK revenue is largely non-cash, and the firm isn't exactly binded to drilling under the program. The firm also has no hedges. With spiking natural gas and a book of $7.2mil of investors the firm is drilling more wells in Q1 than it had in the previous year and half.
throws off enough cash to drill the next couple wells on the same pad in fairly quick fashion. And it allows Magnum and its WI partners to save or divert capex into other areas. In this business that's the cash register ringing!
He does have to pay for his interest in D&C but the reason this program is so lucrative for him is because he gets carried on exploration cost. Even a firm in a low growth stage will still have a large percentage of exploration cost per BOE due to reserve replacing. The 2% participation doesn't extrapolate out into a $1b enterprise without this carry.
Without a doubt Icahn is and should be held in high regard to the long term CHK holder. Not only did he buy the stock during a time of distress, when he could have waited and then negotiated a yielding mezzanine deal laced with warrants. Instead he chose to grind it out with common. Furthermore, he relived the company of a CEO who was doing nothing but pouring gasoline all over the place.
layahillary, Did you see the news on PDO? It made me think of a possible scenario of Great Bear and Royale. But I don't think the Hosmers would wrist control, and I wouldn't want to be "all in" on Alaska shale. Frankly, as a shareholder of Royl, I agree with you that the level of risk to reward here is pretty good.
In the midst of the coldest winter in decades coal the commodity and producers hasn't budged. When this becomes a hot political issue Obama and the democrats will ignore the logic of supply and demand and the fact that they helped steer it. They will however blame the traders on Wall street...Guaranteed!