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SPDR Dow Jones Industrial Average ETF Trust Message Board

jimjones62 535 posts  |  Last Activity: 5 hours ago Member since: Apr 25, 2012
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  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 5 hours ago Flag

    Hilight field value

    1725 x .27 = 466 barrels oil a day
    1725 x .25 = 431 NGL/day
    1725 x .48 = 828 boe ng

    Field rev unhedged oil at $55, ngl $11, ng 2.90 x 6 = 16.4 million a year
    new horizontal wells average 74-88% oil, possible 38 million barrels reserves
    Maint cap 2million a year

    cashflow from field I'd guess after taxes, DD&A etc 10-12Million, 8 x cashflow =$ 88 million, upside prem possible barrel 1-2$ = 38-76 million

    sales price $126-$174 Million

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 13 hours ago Flag

    Proved are 9.9 million boe, 1725 boe per day production and 38 million barrels of possible. PDP 62% PDNP 19% all acreage 100% HBP 48k acres I don't see it being sold for less then $12 per proved boe or 70K per flowing boe, the horizontal drilling proved up the concept, I think it'll go for closer to 150-200million

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 5:29 PM Flag

    It depends on where the reserves are, what type, ls it oil, heavy, ngl, ng, development cost, current production, access to pipelines, take away capacity, what benchmark product receives, they IRR at the current strip, ability to access capital to grow production, reserves in the oil sands are valued much different then in the Eagle Ford or in the deep water of the gulf. The value is unlocked in the specifics. From the P50 comment I 'm guessing it's up in Canada?

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 5:23 PM Flag

    Well, I look at the deal happening in the M&A market, companies in the news were paying 20-24$ to buy proved reserves like the kind Athen has and the ones in the Permian (High IRR's, low main cap like the Athen c02 flood) and $2 for each possible, probable reserve of which Rem are of a higher quality, in fields that have vertical well production with multiple productive zones for horizontal development that are oil weighted like REN....Now do i think someone will buy it for $10 a share now, no, but in a $80 oil price and the rationalizing of the balance sheet over time 3-5 years Ren could be a $10 stock. My back of envelope is a over-view of knowing the risk and if they make it to 2017-2018 what type of reward is there for the patient investor...Kind of a Benjamin Graham formula, buy $1 worth of assets for .50.

    Do some shopping around and see what people are paying for like assets and production and you will have your own conclusion, I encourage you to do it. Let me know what you come up with. Excellent questions btw, all really good ones.

    Sentiment: Strong Buy

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 5:10 PM Flag

    As I said, back of napkin, show the variables you sighted... Still having debt due doesn't mean you have to pay it in one lump sum. Debt can be refinanced as long as a company can show it has the ability to service the debt and there is enough collateral to secure the debt which Ren has currently and in a $80 oil price the value of the future cashflows increase. Just the same as a 5 year mortgage, the bank doesn't foreclose, you roll into another mortgage as long as there is collateral and ability to service debt.

    Yes the " 120M 'accumulated deficit' at the end of Q4 2014" will be used, on paper the company will show a loss but achieve a high level of positive cash flow.

    And in a $80 oil price reserve write downs will come back on to the balance sheet giving more Proved reserves to add collateral.

    5 year rule is basically, you can't book reserves on the balance sheet if you don't plan to drill them in the next 5 years, either because the current strip makes them non-economical or your capital plan can't support it's development. etc...google it, I think they have something like 60 million barrels that can be added back in the future.

    As well the 42$ from sale closed in q2 so it wasn't reflected in debt balance on revolver end q1 Outstanding indebtedness at March 31, 2015, consisted of $240 million in revolving credit facility debt, so proforma asset sale transaction revolver debt of 200 million. The property sale closed on May 1, 2015, and our current borrowing base is $270 million.

  • jimjones62@rocketmail.com by jimjones62 Jul 5, 2015 3:02 AM Flag

    The answer lies in production vs. interest servicing cost per barrel and maint. cap and exploration cap that must be spent to keep production flat example they produce 5000bopd 5000boe of ng, or on a rev basis 6000 bopd interest servicing per year 82million dividends by (6000 barrels per day x 365 day) = 37.44 per flowing barrel of interest servicing cost annually . they will need to spent 20-30 million in maint. cap and 70-80 million in drilling to keep production flat or approx. 100 million dividend 2.19 million barrels produces a year = $45.66 per flowing barrel to keep production flat at 6000/bopd

    When you add it up it tells you the price per barrel at 6000bopd (I say 6000 barrel of oil because its 5000 oil and 5000 ng, 5000 beo ng generates the same rev as 1000 barrels of oil though ng margins are inferior but I'm being generous to the bull case and granting it ) to live within cashflow.

    SO breakeven of 50$ + 37.44 debt servicing + 45.66 maint. cap and drilling cap to keep 6k a day flowing in 2016 = the price oil must be sold at to remain solvent = $133.1

    Of coarse if oil were $90 they could sell assets and JV TMS etc which would lower the cost. BUT the only cure is higher prices, much higher price and higher production to spread their fix cost across more flowing barrels. You can see how selling the EFS with 2k of production does little to the numbers

    Lets say they get 200million for EFS and knock debt serving to 62million, do the math the loss in production outweighs the 20million in saving increasing the debt servicing per barrel to $42.46 raising the breakeven price by 5$

    Their production is far to small for their debt. They would have grown into their debt oil at $110 with some assets sales, but not now and with oil futures 2 years out below $75
    To achieve higher production they have to spent more money, which they don't have or have to borrow and pay interest on.

    Sentiment: Strong Sell

  • Reply to

    My last helping hand.

    by jimjones62 Jul 5, 2015 2:54 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 2:58 AM Flag

    And Cat, go back to the numbers, oil has risen but their all in cuts needs oil to double to generate 1$ of free cashflow. Break Evens in the presentations don't include, interest servicing, Pr payments, g&a etc and in GDP's case the posted $50 break even translates into well over $94 a barrel to break even.

  • jimjones62@rocketmail.com by jimjones62 Jul 5, 2015 2:54 AM Flag

    Since $9 a share I have post numerous detailed financial analysis of GDP broken model and there break-evens net of all costs which basically means they will be insolvent in less then a year barring oil rising to above $100 and the likely restructuring of there capital structure and offered many solutions to avoid the loss many have suffered. Always backed up by the numbers in the 10k.

    This is my last suggestion to achieve the reclaiming your lost capital, On REN page you will find the analysis, here's the pitch of it...it has risk but a much greater likely hood of being around next year.

    "if we back of napkin it, dollars in, dollars out
    Adjusted Rev which including hedge settlement in 2015= $270 million
    cash based G&A 18 million
    LOE 82 million
    cap ex for 2015 45 million
    interest on debt 50 million (approx, increased 6 million for 50million add on)
    270-18-82-45-50= +75 million in free cashflow to pay down debt + 50 million drawn adds to cash

    Ending 2015 cash balance greater then: 125$ million

    Assuming they spent the same in 2016, drill 3 wells, buy the same amount of C02, etc to keep production flat, the higher strip being 14-18$ higher more then makes up for the 4$ decline in hedged price on the 6500 bo/d, we are looking at roughly 150 million in cashflow through to jan1 2017 from operations to pay down debt which would take out the Secured term loan (due September 2018) = 135 (annual interest 16.5 at 12.2% interest) causing a savings of 16.5 million a year and bringing net debt as of jan1 2017 to under 500 million and all the while the IRR are increasing as the strip prices increases, if Hilight is sold our liquidity is further increased as do the margins because Hilights production profile is about 30% oil and 70% NG where as company wide it approx 77% oil

    Just a back of napkin, hope that helps you understand the cashflow potential and viability through the next 2 years. And the possible risk reward and what we all care about, share price appreciation. ;

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 2:41 AM Flag

    if we back of napkin it, dollars in, dollars out
    Adjusted Rev which including hedge settlement in 2015= $270 million
    cash based G&A 18 million
    LOE 82 million
    cap ex for 2015 45 million
    interest on debt 50 million (approx, increased 6 million for 50million add on)
    270-18-82-45-50= +75 million in free cashflow to pay down debt + 50 million drawn adds to cash

    Ending 2015 cash balance greater then: 125$ million

    Assuming they spent the same in 2016, drill 3 wells, buy the same amount of C02, etc to keep production flat, the higher strip being 14-18$ higher more then makes up for the 4$ decline in hedged price on the 6500 bo/d, we are looking at roughly 150 million in cashflow through to jan1 2017 from operations to pay down debt which would take out the Secured term loan (due September 2018) = 135 (annual interest 16.5 at 12.2% interest) causing a savings of 16.5 million a year and bringing net debt as of jan1 2017 to under 500 million and all the while the IRR are increasing as the strip prices increases, if Hilight is sold our liquidity is further increased as do the margins because Hilights production profile is about 30% oil and 70% NG where as company wide it approx 77% oil

    Just a back of napkin, hope that helps you understand the cashflow potential and viability through the next 2 years. And the possible risk reward and what we all care about, share price appreciation. ;O)

    Sentiment: Strong Buy

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 2:16 AM Flag

    "How G&A can be a non cash charge?" don't know if we covered this:

    General and Administrative Expense:
    total g&A q1 7.3 - (noncash 2.8, please read below) = actual cash g&A expense 4.5 million

    Annual non cash G&A = (Approx 4 x 2.8) 11.2 million
    Annual Cash based G&A (4 x 4.5) 18 million

    Resolute incurred cash-based general and administrative expense for the first quarter of 2015 of $4.5 million or $3.68 per Boe in 2015, compared to $5.9 million, or $5.24 per Boe in the comparable 2014 period. Share-based compensation expense, a non-cash item, represented $2.8 million for the first quarter of 2015 and $2.7 million for the first quarter of 2014. Including non-cash expenses, Resolute incurred general and administrative expense for the first quarter of 2015 of $7.3 million as compared to general and administrative expense of $8.6 million during the comparable period in 2014. The decrease is mostly attributable to targeted cost reductions associated with salaries, wages and burdens.

    Sentiment: Strong Buy

  • Reply to

    anaylsis is business

    by jimjones62 Jun 29, 2015 8:38 AM
    jimjones62@rocketmail.com jimjones62 Jul 5, 2015 2:05 AM Flag

    Here is the adjusted rev for q1 including hedges " Total adjusted revenue for the quarter was $65.3 million, including the effect of commodity derivative settlement gains of $24.2 million."

    Considering that q1 saw the lowest oil price averaging 43$ and q2 average will be about $10 higher and total rev. will have the full benefit of the 3 Permian wells, 90 production, it's easy to see that because they are hedged 6500 bo/d from jan1-dec2015 85$ that adjust rev for the year 2015 will be well above 260million (4x the lowest realized price in q1) And given what we know about they cap ex, interest payment, G &, etc at year end 2015 they will have about 50-70million in free cashflow. The realized price using the strip in q 3 is $12 higher then q1 and 14$ higher in q4.

    Plus 6500 bo/d hedged jan1-dec31 2016 at approx $81 and higher strip, ranging 14-19$ higher then q1 2015

    "the strong commodity price hedges we have in place this year and next, position us to withstand lower product prices. We also have the option to draw down an additional $50 million of second lien term debt which, if consummated, would add substantial liquidity. At this stage, we are on track to generate free cash flow in 2015 that we expect to use to reduce our bank debt."

    ""Through the dedicated effort of our employees across all of our operating areas, we have reduced lease operating expense to $16.59 per Boe from $25.11 per Boe in the first quarter 2014. In addition, cash-based general and administrative expense has decreased by $1.5 million from the same period last year, or to $3.68 per Boe from $5.24 per Boe."

    Sentiment: Strong Buy

  • Reply to

    anaylsis is business

    by jimjones62 Jun 29, 2015 8:38 AM
    jimjones62@rocketmail.com jimjones62 Jul 4, 2015 12:42 AM Flag

    it's refreshing to see you research EIA, Opec, IEA, there is such a wealth of free info available. I read about bazil and irag projection cuts in new supply.....it's interesting when you look at the data of global declines from depletion and that we, as an industry must put on production 6-7 million barrels a day per year to stay flat on the supply side.

  • Reply to

    anaylsis is business

    by jimjones62 Jun 29, 2015 8:38 AM
    jimjones62@rocketmail.com jimjones62 Jul 3, 2015 3:30 PM Flag

    I guess the questions are: can they survive with the current shareholders intact and if so what are the shares worth in a $80 oil price environment? My take on oil is the recovery will be in 2017 and bounce between 80-90$ from 2017-2023 then increase up from there.

    That's why I am giving serious thought to this company because of the hedging through 2016 and low cost of Athen. In some ways I'd rather they sell everything, keep a 4% orri in Perian, keep Denton and Athen fields and become an oil focused MLP

  • Reply to

    anaylsis is business

    by jimjones62 Jun 29, 2015 8:38 AM
    jimjones62@rocketmail.com jimjones62 Jul 3, 2015 3:25 PM Flag

    As far as your point my est maybe to high, by 20-30 million, I can concede that but in my example I am using a 57$ flat oil price which is low. Good thoughts though, next week I'll post a detail specific break out sighting source in 10k and use a 60$ flat oil price. Thanks Zanzibar...

  • Reply to

    anaylsis is business

    by jimjones62 Jun 29, 2015 8:38 AM
    jimjones62@rocketmail.com jimjones62 Jul 3, 2015 3:14 PM Flag

    please look at average production and realized price in q1 and what it is now and strip pricing going forward as well as volumes from new wells in Permian. Rev will continue to increase with flat production because of the strip, in q1 say oil was 42$ and in q4 the strip is 63$ then your unhedged volumes have a 50% increase in take, or rev

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 3, 2015 12:35 PM Flag

    and G&A has about 6-7 million in non cash charges annually.

    Thank you for the question, good ones and reasonable to inquire about.

    Happy 4th.

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 3, 2015 12:23 PM Flag

    I think you made a mistake, if lease ops expense was 80million/ q then it would exceed total annual rev. for the whole company annually. For Q 1 2015 loe was 20 million for the whole companies and will continue to decline as non-core acreage is sold.

    My example above deals with just the Athen field which makes up half of the companies production. I included 15 million of loe in the "30 million maincap, co2 purchases", fyi: Q1 2015 they spent 2.1 million on CO2 (see margin/cost structure break out in june presentation and it's in the 10k. co2 commitments)

    Plus i included total corp g&A 28 million even though my example is only booking rev from Athen, and the other half of the companies production is profitable and generating cash.

    Loe is much lower Athen field then other assets
    "•Nominal maintenance capex; primarily CO2"

    Again bare in mind, I was just illustrating that the company can stay solvent just on the cashflow from Athen because of it's low cost production and low decline rate and r/p index of 20 years. Being 88% oil in reserves company wide and forecast for 2017 oil in the 80$-90$ they should weather the storm and be fine because no debt is due in 2015, 2016 and importantly they have a strong hedge book 6500 bopd in each year and can internally fund operations to hold production flat and generate free cash to pay down debt in the mean time

    As they sell out non-core, low margin properties and production, and pay down some debt lowering interest expense, LOE also will drop and margins company wide per boe will increase because you are dropping the weakest link. At it's current share price it's silly, yes there is risk but because of the above stated it a 1:5 risk:reward. good odds

    Sentiment: Strong Buy

  • Reply to

    CFO and director resign

    by jimjones62 Jun 30, 2015 11:11 PM
    jimjones62@rocketmail.com jimjones62 Jul 1, 2015 12:43 PM Flag

    So who is now the CFO? It's an important question, isn't it? It's your money right Leggie, don't you want to know who is now stewarding it.

    I could care less whether it rises or falls, now that you have changed your name the Leggie, (thought I wasn't aware of your duel identity, it's easy to correlate) what I care about is your misinformation and for all your huffing and puffing the price continues to decline based on the underlining micro and macro fundamentals.

    Don't worry I will not be far to correct you when you post your fictions and opionions and try to pass them off as facts.

    Again child, I am waiting for you the post 1 piece of research to support your rosy thesis. The board is waiting as am I.

  • Reply to

    Value of Athen field and positive cashflow

    by jimjones62 Jul 1, 2015 11:04 AM
    jimjones62@rocketmail.com jimjones62 Jul 1, 2015 11:06 AM Flag

    Current share price values company at 1x POSITIVE cashflow from Athen which is silly considering the value of Permian acreage and value of Hilight Field which isn't being considered n price. All in $3-4 Less

    Sentiment: Strong Buy

  • jimjones62@rocketmail.com by jimjones62 Jul 1, 2015 11:04 AM Flag

    Current production is 12500boe/day of that 8875 is oil.

    Athen field alone produces 6000 barrels of oil a day, a mature co2 recovery field with low decline, 7% a year so maint cap, 57 million barrels of oil reserves, is approx 19 million a year to maintain production.

    Let's only look at Athen
    Numbers don't take into account 6500bo/d hedged in both 2015 @ $85.77, 2016 @ $80.42

    6000 bo/d x 365= 2190000 barrels a year
    say oil averages 60$ in 2015, 2016
    rev 131.4 million
    minus main cap, c02 purchases, 30million
    cashflow of 101 million
    minus total compnay interest expense on debt 45 Million
    corp expense g&a 28 million

    net cashflow just Athen field = 28.4 million
    That number is unhedged and holding oil at 604 through 2015-2016
    Athen is not sexy like Permian but it provided stable cashflow and high margin oil production to maintain companies debt servicing and maint cap expenditures through to when oil recovers by 2017

    Now if you add in the hedged through to jan 1 2017 Athen alone will provide over 100million in free cashflow, covering all the companies obligations and once Hilight Field is sold the margins will increase because Hilight is a good field but it's returns don't compare to Athen

    Current share price values company at 1x cashflow from Athen which is silly considering the value of Permian acreage and value of Hilight Field which isn't being considered n price. All in $3-4

    Sentiment: Strong Buy

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