Doesn't sound like holding acreage is problem, to 350 wells.
PDC has acquired approximately 54,000 net acres in this prospective play and believes the Utica could be one of the top tier economic shale plays in the US onshore. The Company’s acreage is very well positioned in the wet gas and condensate windows of the play based on the Company’s drilling activity and other reported industry well results.
The Company has substantial time to develop the estimated 300 horizontal locations identified on its leasehold as approximately 46% of PDC’s acreage is held by production (“HBP”) and the remaining 54% is held by multi-year primary term leases with options to extend.
PDC is encouraged from drilling, mud log, geological, and production data that the Company has gathered to-date. PDC drilled two horizontal wells in 2012 and spud 11 in 2013. At the end of December, 2013, the Company had 11 wells to sales with an estimated gross, three-stream production of 5,200 Boe per day. PDC booked its first proved reserves of 14 MMBoe in the Utica at year-end 2013. In 2014, the Company plans to spud 18 wells in the play – eight on its northern acreage, five in Noble County and five on its southern
Don, We didn't get the intensity that they got in the SE part of Larimer County, or Boulder, we're NE Larimer, but have had flood warnings the past couple of days, has rained slowly all day. No fire dangers. One area got 9 inches in 90 minutes or something like that but it was on the plains, in the mtns, we would have had raging water again.
BD, Good question about the hbp, don't know, I think GPOR might be a good bet also. I'm tapped out and probably will just let things ride until something blows up. Just scanned the WMB report, didn't see anything unsettling, repeated guidance, $3.25 div in 17, 3 to 4%, stock price of $80 to $110 at those yields. I think I'll just let what I own ride and hope rates don't explode and oil stays around $100 and gas exports start taking off.
Things are well, hope the same for you all. I like the mountains but miss Texas, was in Boulder yesterday and feels more and more like CA. On PDCE, just saw that they sold Marcellus asset today and upped Utica acreage which I want to believe is a good indication of the Utica potential, which I don't think there is much value in the stock. I am probably at the upper end of the range, best case, for the WMB potential. Easier for me to ride the ups and downs with the 4% yield, which should go to 3% if rates don't spike. I would have bet the market would have been up today with the 4% GDP growth for q2, and yesterday's consumer sentiment number. Guess the market is now afraid of rates vs feeling good about the economy. I don't think the Fed moves as fast as they should in fear of killing growth. My fear is they don't move near fast enough. If I had funds, i would be buying today, need to reduce the WMB position but can't rationalize selling just yet. Good market and a good report today, $2.24 div for next div /3.5% yield, $64 stock price, not beyond the realm of possibility.
Birdog, part of a piece on the Wattenberg and PDCE at SA. I came to the conclusion a few days ago after looking at Noble's pres that with the extended reach laterals, up to 10k ft, not sure the 2k set back would have that much affect but once you open that can of worms, who knows. PDCE at low $50s is way too cheap. Also, think WMB might get a boost from earnings report today, after close, but I'm not very good at the short term calls, but do think the market is not recognizing the growth from the Access deal. Think it could be a $100 stock in a couple of years.
PDCE has 97,000 net Niobrara/Wattenberg acres. Some touches near the outskirts of Greeley City and some is close to the smaller towns of Evans, Johnstown and Windsor. That said, it is clear that the great majority of PDCE's Wattenberg acreage is not located near built-up areas. Considering the distinction between the above-ground well location and the underground well positioning, the proposed rules are likely to have only a modestly negative impact on PDCE's drilling inventory. Certainly, nothing like the 30% hit the stock price has experienced this past six weeks. Also investors should keep in mind that PDCE's Wattenberg acreage only repre
sents part of PDCE's overall drilling inventory.
Comments from ECA's CEO. One of the industry initiatives is for local entities that restrict drilling, they wouldn't receive state tax revenues from oil and gas production. Guess too many people in CO are influenced by the recently passed pot laws. I think this would be crippling for CO, but who knows if the idiot voters will pass it. State income taxes would probably rise, but no one's mentioning that yet.
just for everyone’s background, there were a large number of ballot initiatives started for the November election here. That’s now been reduced to two. And there’s been a lot of development in this space over the last week or 10 days, which we see as positive. The biggest being that some of the most important and significant political leaders here in the state of Colorado have come out and openly opposed these initiatives, as well as almost the entire, if not the entire business community across the state.
People realize this is not an oil and gas issue. This is an economic issue for the State of Colorado.
And we’ll see how that develops over the year. … I think all of the businesses that operate in the State of Colorado realize this would be quite detrimental if implemented as stated in the initiative. The exact percentage is hard to tell and the implications, but it would have a significant impact to all the operators in the DJ
Basin if these ballot initiatives came into force. But it’s hard to speculate on, one, whether that happens. And, two, how it would get implemented and what reaction people would have to it.”
I am guessing, which is stated well in the CS report, that investors are still not giving Williams full credit for the deal they just did. Report next Thursday after the close and think the market may get more of the full picture for growth over the next few years. And CS intimated that the projected value doesn't include any other deals or growth projects. A couple of the GPs are around 2% yields with around the same growth. $3.50 div in 17 at 2% yield, $175 stock price, $58 today. That's not a forecast, but feels there is plenty of upside if rates stay low and the oil boom continues, both of which I believe will today. Today is the key word. Not sure why EPD wouldn't offer a one for one stock deal at $79.
More I look at the issue, the cloudier it gets. The obvious answer is no way the measure will pass, would kill a golden goose. But I think Colorado is becoming a weirder place, a la California. And with that attitude, who knows what they will do in a state wide election. Weld county where the development is wanted to secede from the state in the near past, can understand why. I love the mountains but am getting tired of the politics.
Seems with extended reach laterals, companies could work around this change. NBL sees the NPVs of the longer laterals increasing dramatically. In that case, wouldn't be an issue.
From Noble's cc. The DJ is turning into one of the world best plays, they are talking about recoveries going from single digits to teens with new completion techniques. Seems they could increase the laterals but would involve a cost.
We believe the ballot measure proposing a 2000-foot set back is a step in the wrong direction for Colorado. Existing setback rules which require 500 to a 1000 foot distances from occupied strictures were just put into effect last year and they are some of the most aggressive regulations in the country. The 2000-foot setback, while a four-fold increase in direct distance is a 16-fold increase in terms of total surface area affected. This would have a significant impact on development of oil and gas in certain areas of the state, perhaps not a substantial and near term, as companies could shift their focus to areas not as affected. I know you like for us to provide a specific number of potential locations at risk; however without clarity on how the ballot measure
would be implemented including the potential for obtaining wavers, quantifying the impact would be pure speculation at this point.
Birdog, this is from a piece from a friend who is in state govt relations with a midstream co, also talked to my nephew who is now with Noble. This is a big deal if passed, would affect CO a bunch. And Noble, PDCE. Not going away soon.
Initiative No. 88: Establishes a 2,000-foot well setback from occupied structures, up from 500 feet under current law
· This measure takes private property rights, and for our largest customers in the DJ Basin, makes up to 70 percent of their leased acreage off limits to development.
There is a good article on Enercom about the Wattenberg, couldn't post the link. The setback change would materially affect the well count. I'm guessing that the stock is $10 lower because of this. Also, Noble released earnings today, the type curves are going up in the Niobrara with new completion techniques. I can't imagine that Co would pass the referendum but who knows. It is beginning to feel more like the West Coast than mid America. Boulder decided to issue same sex marriage licenses even though the Co Atty Gen said it was illegal. Their is some advantage to operating in places like West Texas and North Dakota.
Looks like the posting idiots are back.
Birdog, this is the latest CS report on WMB. If oil stays in the $100 range and the 10 yr T note stays around 3%, not sure what would keep WMB from hitting their targets, $3.25 div in 16. Problem I have is there's not much to do, doing nothing but holding WMB might be the best result for another couple of years. As CS states, at 3% the stock could get close to $80 within the next 12 months. And a decent yield. Q3 div will be $2.24 at 3% yield is $75, that is maybe the current value.
WMB Value Unlocking Only Just Beginning—Despite the recent move in the stock over the past few weeks,
we believe there is significant further re- rating to come from WMB. We believe our TP of $69 is just a starting point for the stock looking out a year from now—this TP amounts to a ~3.5% target yield, and based on pure-play GP comps and its growth profile looking ahead, this could eventually settle closer to 3% which would imply that the stock could potentially drive closer to $80 (Exhibit 2). Our TP equates to comfortable upside potential of ~20% over the next 12 months, and full re- rating to ~3% yield amounts to upside closer to 40%. We also note that a cleaner structure within the family could also better facilitate M&A, and even further upside with it (see next bullet for thoughts on timing)
Don, I have thought EXXI was a cheap co for a long time, and it is cheaper still. Too much to choose from onshore for it to get a good multiple. It seems all you have to do is buy a Permian co and it will go up significantly. And the Bakken players keep improving their recoveries. Still think SN and GPOR are maybe great bets but will take some time to play out. And GDP higher risk, good return with a successful TMS. Right now, I can't see beyond the value in PDCE, 850 mm barrels of potential reserves.
Birdog, I don't get the weakness in PDCE, have been buying more. One issue that I haven't spent much time with is the referendum on fracking regs in CO which would affect the Wattenberg field, that may be the driving issue right now, but it hasn't hurt BCEI which is selling for $60. Looked at the forecast for 16 again, that is a ways out. $700 mm ebitda, $1150 mm debt, at an 8x multiple, stock should be $120 per share. Have been trying to figure out how to buy more but I don't want to sell anything and don't want to expand margin now either. I own too much WMB but if it pays $3.50 div in 17 at 3% yield, not unreasonable for a pure GP, the stock will be $117, a double in three years. Even at a 4% yield if rates start to rise, $88 price. I can't bring myself to sell anything else, PAGP still looks like a great bet and CSTE, Merrill forecast $3.50 eps in 16, at 25x, the stock would be $88, $47 today. The market not going to keep going up with no volatility, but talking heads have been saying that for a couple of years. I still think PDCE will be great bet a year out.
My drug of choice is a good IPA which CO produces a bunch of. You have to read the latest article from Jeremy Grantham, can google it, was on Barron's site. Says the bubble is not over yet and goes through the reasons, his value is 2250 before we get to bubble territory. The culprit in creating another bubble is the same, the Fed keeping rates too low for too long, and their attitude is that they will not try to prevent an asset bubble, but will clean up after it explodes. So this should be round three or whatever. He thinks we are early in a recovery which will keep the Fed in the low rate mode. And he sees lots of acquisitions, that makes sense, if you have restructure your balance sheet, the next move is to buy other competitors or to make strategic buys, rates will not get lower, and profit margins are high. I agree with everything except I think his 2250 is a low target. Time will tell.
The CNBC talking heads are saying it now, the market is ignoring geopolitical events, as they have been buying opps over the past couple of years. Earnings off to a fairly good start. Here's the consensus position, market ends higher year end, corrects 10% maybe before year end, that is a worthless call, and probably most importanty, where do you invest other than the market. The German bund yield is 1.2%. This feels different this time, the 10 yr yield went down and the market went up. Maybe we revisit 2% on the 10 yr with good stock performance. That's not a forecast I've heard yet.
One more comment, this market is somewhat baffling to me today. If geopolitical is not the risk it used to be, we survived things like Greece and Cyprus, more media events than anything else, and now the ME doesn't seem to be a concern. Can it be that we aren't worried about global energy disruptions, could be. That leaves the obvious, the Fed and when it starts tightening or it waits too long and the market makes the correction for them. My bet today, may change, is it takes a few years to play out. And the market bubble inflates. S and P 500 at 3000 in 16, plausible.