Cooperman stake for SD 9/30, up to 7%. Implications for MPO? Does shine a light on the Miss.
SandRidge Energy (NYSE: SD) raised from 29,258,509 shares to 34,256,163 shares
Cooperman's 9/30 stake, if he held it through the "plan" probably not too pleased. Wonder if an activist gets involved, seems you could move it to the $20s fairly easily. Not much downside.
Denbury Resources, Inc. (NYSE: DNR) raised from 3,570,227 shares to 4,917,727 shares
Devon, another idea that's better than DNR. Higher div yield, and better growth. Just saw an analyst NAV calculation of $106, $60 price currently. Barron's just had an article, cheapest oil play, believe they are being valued at 3.5x ebitda.
WMB owns 50% of the ACMP gp and units. Some think they buy the rest of the GP soon, whether it is merged with WPZ? WMB does, will own it.
Good post me2. QEP is involved in an activist skirmish, analyst compares 14 ebitda of "gassy peers" multiple of 6.5x to 7x. QEP is 71% gas. Pick your best shot at MPO '14 ebitda and apply the 6.5x, you come up with a price which is a multiple of the current price, and apply your debt discount. Or use q3 ebitda at 6.5x. A double digit value in any scenario if they execute and seems they did in q3, could say ahead of plan. It's a matter of time.
As for evolving plays and smaller cos, the issues with MPO are the same, it's just the nature of the e and p business, it's not widgets. But the debt does magnify the uncertainty. And as Crum said about other intervals, he is just trying to maximize the value of the upper Miss, and now the targets in the Anadarko, which are still early in the process, but so far, are exceeding expectations, above the high end of the type cure. He led the release with ebitda. I would doubt that they spend anything on other targets in the Miss, and also not much on LA. If Devon proves something else to be attractive, then MPO will get a read through boost in value. Same could happen in the Andarko, as Crum said, benefiting form other cos r and d.
Don't know exactly but they are drilling I think it was 40 wells this q. 160 next year, pick an average for the year 350b on 80 wells, 28kb/d, end 13 at 36, decline to 24 plus 28, 52kb/d end of '14. Needless to say rough and probably overstated, and assumes they spend as much next year, and can borrow. Sure someone else has run the numbers. That seems too big and it may be.
A couple of positive reports and we could move to the $7s. At least the sector behaved better today. Lessen the liquidity issues with a good LA JV and up a couple of dollars.. And then a 10 million sh equity raise in double digits get you through 14 into 15. Good well results will overcome a lot, and a healthy oil price. Lots of traders will still be looking at the 3000k wells in the Permian, EF, Utica.... Can't compete with that attraction.
SU would be a better choice, double the yield and much better growth than the 8% DNR is projecting.
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.