If you want one of the top midstream cos for the next several years, MWE stumbled some this q, down 10% today, but the outlook for the next few years looks great. Could do $5 dist in '16, at 3% yield, $167 per unit, $68 today. It is an MLP with k1 complexity. Also could end up with someone else.
Could be good for BCEI, they will let SWN do the r and d. Everything Permian looks good today, guess it's the PXD report. AREX, LPI, FANG, ATHL...
A recent vertical test in the Lower Smackover Brown Dense in southern Arkansas and northern Louisiana suggests the play could evolve to commerciality. Southwestern announced its first economic well, Sharp 22-22-1#1, which commenced at a peak 24-hour production rate of 600 b/d of condensate and 1.3 MMcf/d of
gas. While these results are encouraging, it is too early to gauge the valuation impact of the Brown Dense.
Thanks, that would give a boost to the stock assuming a good rec, not sure you add if it wasn't something the brokers could sell. Seems I remember MPO coverage before with them. A lot of them got burned with the IPO, slow to come back.
As to Crum, the more I listen to him, the more I like his style. As they say, this is not his first rodeo and he's not going to get caught out on the limb. But reading between the lines, they have a lot of potential. The Miss acreage going from 80 to 115k acres, if I got that right seems a big deal. No wonder he's not telling everyone what they are doing to get the 570boe IP 30 wells. And he has the backing of private equity and apparently they buy into his long term plan. A LA JV coupled with growth plans for '14 would be a good way to start next year. As to the open hole completions, though I heard something like 40% reduction in costs, drill days are maxed out, so pad drilling and completions are the opps. And Crum said he had been waiting for this cc for a while, he seems fairly confident at the moment, different from the past couple of ccs. I think we have reached the tipping point for the co and the stock. But then again, I am an optimist.
I noticed that, hasn't been on the calls, I don't think, don't remember the question he asked, that would probably give you an indication. A MS coverage with a good call would help a bunch. The silliness of how it works, all they do is repeat what management said, but investors listen to that source.
Thinking about the analysts and the inane questions they ask, makes you wonder how much value they add. The question about the debt multiple.
One of my midstream cos Markwest is getting beat up, still a great long term bet, but the analysts in general are as clueless or as informed as individual investors that invest some time in reading 10qs and looking at presentations. Looks like Pioneer had a good report today, all of the Permian players are going up. Lots of upside in the Permian.
With other midstream players in the Marcellus/Utica posting recentbeats, the surprise miss and conservative guidance was a large negative surprise for us.
Questioned about the other Miss intervals and the Woodford, Crum said they are too busy maximizing results from the upper zone. He's not into the Aubrey McClendon school of blue sky potential.
I will leave it alone, but if you figure the Miss wells exceed the high end of the type curve, and with the increased acreage, MPO could have 300 million barrels of potential. Maybe not a Permian number but the returns are better. And the Anadarko, they said 100 million barrels, that could be conservative also. Time will tell. MPO will be around for long time.
Debt load is still the biggest issue imo, he did say the revolver could handle the capex, next re determination is April. A good JV in LA would help a bunch, I don't think they want to give it up but can't drill there with the success they are having in the Mid Cont, why return 40% or whatever when you are seeing 60% or more in the mid cont. Put this one away until the next q release and hope oil doesn't crater in the interim.
rjf, Crum couldn't or wouldn't answer the question about the diff in 570 boe/d 30 IPs and peers. Did infer that geology matters, but they also could have a leg up on completions, use of seismic, and he doesn't intend to give it away. Did say they have the best acreage in the play. He said they look at the data all the time and don't have an answer, still suspect that they have a good hunch. And their declines are steeper than peers, and he said he hopes they are right, boost EURs. He is definitely an engineer, you should appreciate that, he's not going to venture into too much speculation and let the data answer the question. Seems they could pick up more acreage along the way as well. They had 80kacres in the last report I believe and now have 115k acres. Might not find out what they know until they have acquired all they want or can.
Bottom line for me is Crum is operating this co with long term investors in mind, not short term buzz traders. There are other cos, plays that will provide that need, and they analysts are focusing that way also. Was not impressed with the questions except one guy asked about the 570 b Miiss, double competitors and also focused on the Cleveland wells that hit over 600boe'd. MPO doesn't have enough coverage from the top tier bankers maybe, but that could change. The value is there, just going to take some time.
they gave guidance of 31 to 32 for the quarter, I think they are going to be in the under promise over deliver mode, which is great. A JV of LA would probably help the most at the moment, liquidity is still the thing that will weigh most, the results for the Miss and Anadarko were outstanding. And they think LA is good, but the mid cont is better. A JV would let them use others capital and they could still benefit from the play. And it's 80% oil, seems you could sell that.
The cc, bad news, good news, Crum is an engineer, Crum is an engineer. Actually, think he is going to make this into a fairly successful e and p co. He did say that their Miss acreage, now 115k acres, is the "best in the play". Asked about the 570 ip being double peers, he inferred that geology matters. Said that competitors are using more shallow declines, and he hopes they are right, the MPO EURs will go up, but he is not ready to make that call. Again, an engineer, but looks like it is going there. Great news on pad drilling, costs are down to $3.4 million per well, $400k less, drill times won't be reduced but other completion costs could bring it down further. Better IPs and reduced costs, 50% IRRs could be conservative.
The Cleveland wells at 380+ ips 30 days, best 5 wells with diff completions, 630 boe/d and the type curve max is 360, again, could be as good a returns in most plays. Also, he mentioned that are learning from other active operators in the Anadarko, Apache maybe.
As for LA, they are optimistic about the play but sounds they want a JV. Did say that they revolver will cover their capex needs, no capex to LA this quarter. Mentioned stacked pays at So BH Creek.
If you liked the plan, they seem to be exceeding it in the mid continent. Don't think a purchase of anything is likely and a JV, sale is good prospect, but they won't give LA away, did say the returns in the mid cont exceed the LA play, which has 80% liquids, seems it would be attractive as a JV.
I bought some more, will see what the cc brings, but other than the sector influence, this seems a good report to me. Another analyst didn't pick up on the Miss performance relative to others, did mention the outperformance on the Cleveland wells. They are not going to give them the benefit of the doubt, probably still feeling the negatives from the IPO when they were targeting $20 per share and got burned.
Also, from Atlas, in the same are as MPO, these are 45 day nos, but they claim 468 vs 290 curve, that's 60% greater. My guess is the rocks, don't know, but the difference is significant, and has gotten really no recognition from analysts. That could change. Crum needs to do well today and start leading them more to the potential value. Plus the Anadarko Cleveland wells are above the high side of the type curve. Come at a time when the sector may be rolling over, traders have made some money this year.
On average, over the 45 day period, as mentioned, the wells connected in the third quarter produced 468
BOE per day, composed of 53% liquids, including 161 barrels a day of crude oil and 46% residue gas. This compares to a tight curve for a 45 day period of roughly 290 BOE, composed 58% of liquids, including 126 barrels of oil per day and 42% residue gas.
The analysts may be picking up on the difference. A comment this morning.t also is higher thatn Atlas, but they are significantly higher than the 300. I don't think there is anything in the stock for this factor. A big deal imo. The 570 is double the 270 curve at SD, which touts 50% IRRs at that level.
The 570boe/d IP 30. This exceeds our type curve of 385boe/d and compares favorably to offset operators SD and DVN, type curve 300boe/d.
Just thought you could shed some light on the diff in SD's type curve of 270boe vs MPOs 100+ wells at 570, and also SD's experience in the 300s. That's a big difference.
revenues rose 330% year/year to $111.5 mln vs the $148.1 mln consensus.
Another report that the consensus $148 vs $156, actually a beat. A couple of pennies is not material at this stage of MPO's existence. What Crum says tomorrow will have much more impact on the perceived value.
You have to ask yourself, what in the report would make you sell, or maybe it's a oil price decline concern. Selling just because the price does down tomorrow at the open is not a good reason. Doesn't the cc start at 10 eastern, selling at the open, you won't even know the whole picture until after the cc, could be up big or down as well after the call. The report was on plan. If you didn't like the plan, probably shouldn't have bought in the first place. If a trader, probably hard to hold with a down sector trend, but if a long term buyer, a year or more, this was a good report, and if you think oil stays in the $90s+. I will listen to the cc and buy more or not and then just wait for the next quarter. This company is worth more than $6 longer term, how much is to be determined.