Crum is a great driller and poor communicator, not sure you want a co where the skills are reversed. Looked at APA's Anadarko pres, lots of opp, similar to the Permian Basin, maybe not as easy to exploit but rich in hydrocarbons. Bought a bunch yesterday, s speculation at this point, but feel a good one.
As for the sector, if you believe $98 oil and $5+ gas, today's prices, vs $80 oil and $4 gas long term, as most are assuming for the sector, there is a bunch of money to be made. BCEI at $100 oil in a couple of years could be $100, bought some more yesterday. PDCE will exceed that. Looked at APA, great Permian as well as Anadarko, selling for 4x or lower '15 ebitda at today's prices. Oil stable and APA up 50%. Assume oil doesn't crater, the sector is cheap. OAS at $40, ROSE at $40. All of the Permian cos, PXD, LPI, FANG, AREX. AREX is my choice but the others should do well. Oil stays where it is, sector up 40%, probably the same on the downside if it recedes to $80. Place you bets.
Obama will probably take credit for putting the country well on the road to energy independence, worse than that, most of the electorate will believe him. I have turned off politicians all together. Not sure I'm missing much. Some days I think we are in the middle of the energy revolution and on others, I think it's almost ready to peak. Today, I'm not sure of either. I did buy some more MPO today, may be arranging the deck chairs on a sinking ship, will see. Bought back AREX yesterday, seems the Permian will be a big deal for a long time. And my favorite is PDCE, closely followed by BCEI. Looked at APC pres on the Wattenberg, 4000 wells to drill Before Tax NPV per well $5.3 million. BCEI has 1500 wells so they say, that's almost $8 billion of NPV to be had. And PDCE looks ever richer, plus the Utica. If prices don't crater, good times could continue. OAS at
Yes, LA was a relative bust, they never should have brought the co public with that asset as the core, then had a title issue, LA asset was premature, imo. Now LA is forgotten. So they are responsible, the other two cores look good but high debt and a erratic Miss play plus not much data on the Anadarko and here we are at $4. You don't get a high return without taking risk, the uncertainty, but at $4.20, seems most of everything bad is priced in. But maybe not.
They valued reserves at $2 billion end of 12 and with Anadarko thrown in. The EV is now $2.3 Billion. A 15% increase will get it to EV. i would bet they exceed that. Don't see how they don't. Not sure reserves will do much except show the cheapness of the co. But won't help the debt issue.
This is without my calculator, this is overdone, $280mm equity, that's half the drill budget this year. This is along ways from bk, and the price assumes that. If you think it's a long ways from bk, it's a great value.
Black is a good, basic investor, didn't see Barron's this week. Consider too that they could have eps of over $4 next year, less than 10x current price. And we are arguing here when MPO will show even a few pennies of eps. A 15x pe for BCEI gets you $60 min. I really like BCEI and like PDCE even more. I will probably end up with too much of both. And MPO at today's price looks like a great value. $97 oil and $5.25 gas today, those are good numbers for the industry. Kind of a head scratcher for me. May add a small amount more of MPO. And I like AREX.
cbd, just looking at an APC pres, the Wattenberg. They claim that they have 4000k well potential. They show the BTAX NPV for a 350kboe EUR well at $90 oil, $3.50 gas, at $5.3 million, they also own mineral interests related to their land grant holdings, that add another couple of million. But BCEI claims 1500 wells potential, at that $5.3 mm per well NPV, close to $8 billion of potential value. For a $2 billion EV co. And PDCE's potential is greater. Just seems that if we don't get the move back to the $80s that everyone is calling for, some of these small cos will be much bigger cos in a couple of years. And gas at $5, that's a big deal when 30 to 40% of prod is gas. I'm trying to restrain myself from getting too carried away with small e and ps, the move down in price could still happen, but did see a comment today that the infrastructure may be avoiding a crash in WTI, the Keystone leg they just opened is helping. Exporting may be next. I'm not sure the Niobrara is getting the recognition it deserves at the moment. APC leads with it and they have great projects around the globe. NBL is increasing production 20% per year for the next few years and the Niobrara is helping. Whiting claims big returns and they aren't in the core. Although the Barrett nos today didn't seem to stack up, haven't looked at the detail. Also on the Utica, Aubrey bought more acreage, no matter what you say about his mgt skill, he is putting that play first. Again, PDCE, not much value recognized there.
Don, nat gas is enjoying the winter, probably more than you are. All of a sudden the market sees $4+ for a few years. If this is a new trend, seems a coal bet would work, NRP pays 9% dist. Do you still have ACI?
Your are right, that could move the stock price back to $6+ fairly quickly, assuming it was perceived as a good deal, $400 mm for LA sounds low to me, particularly when you consider that it was the core of the co at one point. I was hoping for $600mm. Sale of LA and it would be back to execution through '15 and growing into the debt, and we have a double digit stock. Not sure most investors will have the stomach to stick with it, consider the past couple of months. A double is still a possibility and $9 is maybe easier than $12 was a few days ago. MPO still has a place in a portfolio but it is on the more speculative, high risk/reward side.
BCEI is selling for a little under 4x '15 ebitda, at a 6x mult, probably low considering the growth, a $70 value selling for $39 today, it's a great value. Every mult turn gets you $14 per share, 8x, your looking at a $100 stock. And it is close to free cash flowing. A 5x mult for MPO gets you $10, no way MPO gets more than that for a while with the debt. So you have maybe similar upside with both and very low debt with BCEI, looks like an easy call to me. Guess garbage is relative.
cbd, my biggest concern which is usually the case is commodity price. But WTI is edging up this a m but most expect $80s but the Brent diif is $8. Lots of talk about that blowing out again. I think I own all of the BCEI and PDCE I want to but yesterday was tempting, I missed the Mon rout, would probably have added then. I did buy some AREX yesterday, another fast grower in the Permian, I want exposure there, I have traded FANG some. Noticed that Aubrey Mcclendon just bought more acreage in the Utica, seems PDCE is positioned as well as any co with the Niobrara and Utica. Lots of targets in the $80s for PDCE and will be interesting to see where CS comes out on NAV, could be a big no and the Utica is not getting much value. Seems the biggest factor will continue to be commodity price and $80s won't be kind to the small cos. I think I have all I'm going to put into e and p at the moment, would shift more with a plunge in comm price, although PDCE looks very tempting. And I still think BCEI is a great value with the balance sheet, the CEO thing is troublesome, but could it put the co in play? Would find the true value then. I so own some MPO. That's it for now in e and p. Did notice that APA is down in the $70s and they have a great Permian position and the Andarko which will be important for MPO as well. For a large co, doesn't seem like much downside. Still would buy PDCE over everything else today.
This is not an eps story. The interest/pref stock payments are around $190 million, That's $2.80 per share. That's a substantial burden. This is a story of growing into the debt, and can still be done, but so far they are falling short of expectations they helped set. Still might pull it off and if they do it's a triple or whatever and the risk was worth the bet. Without the debt, investors would probably be somewhat miffed at the prod guidance but it would be a minor event, the debt magnifies the out performance and the misses. There are alternatives to MPO but haven't found one with the debt profile.
Yeah, I've been traveling, just saw it, a head scratcher, wonder if the co is on the block. They put out a new pres and nothing really materially different. Looked at WLL's pres on the Niobrara, 3300 well inventory, potentially 1.5 billion bs over 160k gross acres. Looks like WLL has found another core asset. Seems the Niobrara will compete with the Permian for activity. And WLL's asset is NE of the Wattenberg field, seems the play is extending. I have bought a bunch of BCEI and PDCE, underwater so far, but WTI pushing $98 today is encouraging.
cbd, traveling the past few days, what's the deal with the BCEI CEO departure, timing seems suspect. Looked at a WLL pres on the Niobrara, they claim maybe 1.5 billion barrels of potential, well over 3000 wells on 160k acres gross. Wonder if the co will be in play and he didn't agree with the decision, or maybe wants to be on the purchasing side. Still looks like one of the best/safest cos in the sector.
We are still importing 40% of our consumption, that's going to keep happening whether Keystone is built, why not take it from Canada vs Saudi Arabia. Seems the trade off between not having to live or die with every ME blow up and the cost, people and dollars, vs the environment, we aren't going to use less oil without the oil sands, we could at least be energy independent from that part of the world with our shale and Canada's production. And I thought that has been are goal for the past several decades. Have a great weekend.