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Denbury Resources Inc. Message Board

harehau 332 posts  |  Last Activity: 49 minutes ago Member since: Oct 10, 2006
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  • harehau harehau 49 minutes ago Flag

    I think OXY might be one of the best e and p bets now, their EOR is double DNR's, have 2 mm acres in the Permian, so great shale potential, and debt is 10% of EV. They have the capital to grow. DNR doesn't. Also pays a 4% div, no risk of being cut.

  • Reply to

    Enough of the BS

    by zappa.bull 14 hours ago
    harehau harehau 1 hour 6 minutes ago Flag

    Actually the 2nd q HH price was a bit higher $2.74 and they netted $2.14. $2.70 less 60 cents, $2.10 /mcf less $1.25 /mcf for the distribution, 85 cents to cover costs. Just a matter of time if nat gas prices don't increase. Could happen but the futures sure aren't betting on it any time soon. ARP's value is the hedges and zero at best for everything else with projected futures pricing.

  • Reply to

    Enough of the BS

    by zappa.bull 14 hours ago
    harehau harehau 1 hour 21 minutes ago Flag

    Another perspective is the dist is around $1.25/mcf. And the current price of gas is around $2.70, that leaves $1.45/mcf for all other costs. Won't cut it. Even with hedges, didn't come close to covering the dist and maint capex was questionable imo. Glta, you'll need it with Eddie, will be interesting how he does it again. And it won't be to the benefit of ARP owners.

  • Reply to

    Enough of the BS

    by zappa.bull 14 hours ago
    harehau harehau 1 hour 41 minutes ago Flag

    Not hard to figure out, $2.14 /mcf gas rev won't cut it. Hedged was $3.30s, coverage of dist was 80s%. OIl hedged at $80s, $40s now. Gas prices for futures doesn't get out of the $3s for years. Only thing that bails them out is $4 plus gas. This is a $4 value at best and most of that is the hedges. I'm sure Eddie will figure something out. Keeping ARP value up temporarily before ARP buys ATLS for a premium. If you were going to invest with him, buy the GP, ATLS over ARP. A merger is coming with a cut in the dist.

    ARP's average sales prices for natural gas before the effects of financial hedging were $2.14 per Mcf and
    $4.13 per Mcf for the three months ended June 30, 2015 and 2014, respectively, and $2.34 per Mcf and $4.39 per Mcf for the six months ended June 30, 2015 and 2014, respectively.

  • Reply to

    Enough of the BS

    by zappa.bull 14 hours ago
    harehau harehau 2 hours 32 minutes ago Flag

    No one that is savvy shorts a $3 stock that is paying out 40% of equity value each year. There will be maybe a couple of e and p MLPS that survive but ARP won't.

  • Reply to

    value w/o distribution

    by harehau Aug 27, 2015 11:02 AM
    harehau harehau 2 hours 39 minutes ago Flag

    Good question, that is the risk with the infrastructure cos. KMI says it has 88% or something like that fee based revenue, and some exposure to oil with their EOR operations, with hedges 95% of revenue is fixed. Risk is over time if the e and p s can't get a decent price for their commodity, pipes will suffer. And some of the gathering and processing MLPs have more commodity exposure to NGLS. Williams sees most of the projects for the next few years will be fee based. The G and P companies are more risky, less than e and p s but more than interstate pipelines. Varies by company. Some pipes have less volumes, some have been reversed to No to So for the Appalachian growth, some gas pipes have been converted to oil. The big risk is that the shales don't keep growing. The infra cos need volumes and not as concerned about price. If shale volumes increase a million barrels per day annually, they will do well, whether the oil price is $80 or $60. Seems to me that we need a million barrels /d more each year from the shales to supply the globe, and companies this year say they can make money at $60 now and volumes have stayed up. That's oil and gas keeps growing at lower and lower prices. Gas production will be up low single digits again next year, if we don't get LNG going at decent prices, the App gas could overrun the market. The gas infrastructure cos should continue to do well even with $2 + gas. I don't think ARP and many of the debt laden e and ps can survive, but the dist will blind people to that until they can't any longer. Add Cohen to the mix and you have a additional risk.

  • Reply to

    value w/o distribution

    by harehau Aug 27, 2015 11:02 AM

    Hope you're right for but don't see it with the dry gas coming out of Appalachia, EQT had a 72mmcf/d well. The Utica is just cranking up and the Marcellus keeps growing at lower prices. ARP can't compete. Won't see $3 average next year. The futures show a $3 handle into the next decade. What would you pay for this co without the distribution, most don't know. $4 value at the most. And most of that's in the hedges. Cheers.

  • Reply to

    value w/o distribution

    by harehau Aug 27, 2015 11:02 AM

    My posts have nothing to do with influencing value, it's $50 oil and $3 gas for several years that's driving the unit price. They just paid out $10mm in dist, that could have paid the interest on $100 million of debt for a year. I am old and owned the units until I got my fill of Eddie's empty statements. You'll find out. There is no way out of this without cutting the dist but he needs the cash at ATLS. Another solution is $75 oil and $4 gas in three years, I think oil will be there but not gas, and in the meantime volumes will dwindle. I think the whole e and p MLP sector will be gone in five years. Crummy cos with third tier assets.

  • Figure out what you would pay for ARP with no distribution. Still feels $4 is about right. If you believe the strip, the value is $2 at best. But probably dips into the $2s again. If you were a director of this co, would you payout 40% of the equity value annually. The rational answer is cut the dist now. Eddie may prevail for the benefit of ATLS and ARP is hung out to dry after the hedge values are paid out.

  • Reply to

    market

    by harehau Aug 24, 2015 8:17 AM
    harehau harehau Aug 27, 2015 10:19 AM Flag

    I don't follow service cos but looked at a couple of commentaries. The deal is expensive, but CAM is only 15%ish value of SLB. I guess SLB feels that deep water market will be part of the equation in the future, can't argue with that, kind of like Exxon's long term view. The deal will be accretive next year, SLB should be high teens, not cheap but they are the best service co in the business. Also, it does take them more into manufacturing which seems is more risky. Not sure it changes SLB's near term performance or detracts from it. If I was going to buy service sector, I'd buy SLB and HAL. I do think that in five years, we will be talking about peak oil and where we will get future reserves, deep water has to be a factor. Also think that the North America will be energy independent or close to it. In that context, the deal will look good. $40 oil can't begin to supply the world. If you had a 5 year outlook, buying everything oil would be a good bet but I think I'd stick with the best of breed cos.

  • Reply to

    williams

    by harehau Aug 17, 2015 2:36 PM
    harehau harehau Aug 26, 2015 1:46 PM Flag

    Been going through my mind also. I think ETE still wants the assets and probably at this point, the old offer is probably all they need to do. ETE could sweeten the deal by merging WPZ into one of their LPs, I think. That is the approach that is speculated about with Spectra. I don't think the collapse again of oil will kill the interest, more a matter of who has a currency to do it. I've been trying to justifying buying more WMB but I have way too much, and own ETE also. Bids supposed to be in this week.

  • Reply to

    Should Be A Dividend Declaration, Soon!

    by newguy7001 Aug 25, 2015 12:26 PM
    harehau harehau Aug 25, 2015 2:19 PM Flag

    I can imagine the release, elimination of distribution will be buried in some "big deal" event notice, probably the merger of the two entities. That way, Eddie gets his hands on all of the cash flow.

  • harehau harehau Aug 25, 2015 12:06 PM Flag

    There is no futures price above the $50s on the strip. Read Yergin's Fortune interview, think is probably the consensus at the moment. Iran coming back prolongs the recovery. China is a mystery, not sure I believe anyone who says they have a good read on their future. OPEC is toast, the Fed is irrelevant. I sense that we are in the bottom but doesn't feel that this is going back up quickly. Not sure there is a playbook for the recovery.

    DNR should eliminate the div, doesn't make sense to continue it with the uncertainty. And there are better bets if you assume $60 oil for a few years.

  • Reply to

    Get ready for a monster rally in ARP

    by blotechproflteer Aug 25, 2015 7:28 AM
    harehau harehau Aug 25, 2015 11:48 AM Flag

    Why would anyone get bullish on ARP with nat gas not showing a futures price $3.50 until '22 and oil is still in the $50s beyond that. I'm sure Eddie is going to layer on some more hedges to solve the problem or float more pref's, guess Cooperman would buy some more. ARP doesn't have prospects that can make money at those futures prices, third tier assets. You are not serious about surviving without eliminating the distribution now, ARP might survive but not his ATLS strategy. This will all be obvious in the next few months, maybe weeks.

  • Reply to

    dividends

    by myles3321 Aug 24, 2015 10:47 AM
    harehau harehau Aug 24, 2015 11:30 AM Flag

    The unit price would probably go up. What they want to do and what they can reasonably do are two different things. Best move is to cut the dist today. Why would they be able to do an accretive deal now when they couldn't in the past and the cost of capital is 30% or whatever. No way they can even begin to buy anything.

  • Reply to

    Are we seeing a return of Alchemy?

    by logicaldeduction Aug 24, 2015 12:08 AM
    harehau harehau Aug 24, 2015 11:02 AM Flag

    Think about it, pref stock should yield more than bonds, can't be done. Why would anyone buy the pref vs the bonds if the bonds have more security and a higher yield. The dist costs you 40% plus, eliminate that first and they might have a chance of surviving, otherwise just a matter of time.

  • harehau by harehau Aug 24, 2015 8:17 AM Flag

    Fear is controlling, 10 yr T note below 2%. OIl in $30s. VIX nearing 30. As they say, predicting 10 of the last 2 bottoms. Fed raise is still out there, almost irrelevant, what do you do when rates are zero and the balance sheet is over done.

  • Reply to

    Cheap Energy Stocks Advancing Today

    by bison666666 Aug 21, 2015 6:09 PM
    harehau harehau Aug 22, 2015 4:12 PM Flag

    Jerry, not going to pretend that I can predict the recover, timing and price level. But I don't think the world can begin to be supplied at $50 or even $60, it's not $100 but somewhere in between. The shales are only 5mmb/c out of 94mmb/d world use, the Saudis are 12mm or whatever the no is. This is the shift from OPEC, SA influence to a market based pricing. It is historic, but in 5 years, the world will need 100mmb/d plus. Where is that coming from? They won't ramp up until there is a price cue, more cash flow or capital available. These are the times that try long term investors. Trying to determine if the low is $25 or $5 or whatever is not important for a long term investor. Cheers.

  • Reply to

    Cheap Energy Stocks Advancing Today

    by bison666666 Aug 21, 2015 6:09 PM
    harehau harehau Aug 22, 2015 12:45 PM Flag

    I listened to Kilduff's interview, now says bottoms in $20s. Easy to throw out something like that. Interesting that they don't ask him the long term equilibrium price, that, imo, is much more difficult call. If oil is $60 in five years, my guess is the US will be almost oil independent because of the shales and while the e and p s in the best rocks will do ok the midstream cos will be the bigger winners. The China scare, who knows, that one is like OPECs spare capacity, who knows. The Fed Reserve, that is an interesting issue, they are are supposed to be focusing on inflation first and employment second. You raise rates when inflation is heating up, it's going the opposite direction, commodities are helping. Never have understood the second mandate, employment. We have a 5%ish unemployment rate and inflation below their objective. The goal unemployment goal was 6.5% not too long ago. So do you raise rates to drive the unemployment no up and inflation up. Kind of lump the Fed in with OPEC, not really relevant anymore. They have lost control of their mandates??? You could probably do away with them and just let the bonds roll off the balance sheet. Bottom line for all of this is we probably put too much emphasis on the short term to the detriment of investment over the long term. In 17, the world will probably use 97.5 mmb/d of oil and 99mm in 18, 100.5 in 19, we used 92.4 in 14. The world needs more oil, the equilibrium price is a big question. Longer term, I am bullish on infrastructure.

  • Reply to

    Cheap Energy Stocks Advancing Today

    by bison666666 Aug 21, 2015 6:09 PM
    harehau harehau Aug 22, 2015 12:10 PM Flag

    Jerry, just read report on macro oil issues. The futures are showing that oil won't above be $60 for years. And there's a billion barrels of global oil in storage and we are over supplied by a million b/d. The factor that I have been wrong on is the drop in US production, at least most now think that vols will stay up with less rigs, in fact, could fall further and vols would still stay up, not necessarily growing but flat. I'm still a skeptic but could be, we will have the same phenom at nat gas, more vols at lower prices. US oil is down to 9.35mmb/d from high of 9.7mm earlier this year. I'm still betting we get more declines.

    OPEC, really SA, spare capacity may be down to 2mmb/d, never understood why they wouldn't release it all if you are in a market share effort. Demand is increasing 1.5mmb/d a year. The real issue contrary to what the media are reporting, it's not the shales anymore, it's SA, Iran, Iraq, Brazil, Russia. SA has increased prod 1.5mmb/d since last fall. Imo, this is more a SA relinquishing control of price to the market and the transition. I still don't think the world can be supplied at $60 long term. But this transition could last longer than I thought, two reasons, the shales are increasing productivity, not falling off, Iran is coming back, Iraq has been up, the rest of the world is producing all out, projects that were developed at $100 oil. Maybe the $75 end of next year is moved out to mid 17. Same bias, if we get more oil volumes with lower prices from the shales, the midstream cos continue to do well. And gas is in $3s for years with more vols, LNG moves the gas but not sure the price increases much. It's a complicated world.

    What did Kilduff say.

DNR
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