awfully quiet now son. please at least look at the fundamentals, whats left, what they owe, the cost of tms, it's 5000 feet deeper then the EFS, more expensive to develop. Meaning unless you have a few 100 million to invest in drilling you are done
you are too under educated about gdp's balance sheet, terms of debt, production profile, current liabilities, etc to have a debate with. I assume you are some kid who decide to give a hand day trading, sorry you choose this one, down on news debt trading at pennies on the dollar.....fyi the production and reserves backed their secured and revolver so very little will hit the balance sheet. plus the revolver will be redetermined lower. leaving them as before the sell little room and just enough liquidity for 4-6 months
Dude what's the enterprise value, what's the debt, the current production, the reserves after sale....Oh i'm sure you made a truck load especially when it#$%$ a new multi decade low on the news. Very funny.
I suggest you look at what's left of the company, they sold cashflow, almost 40% of the companies oil production. It's obvious that the PR dividend will cease. Debt servicing is still north of 80 million per year so what will rev be now, sub 100 million in 2016? I wouldn't say they are out of the woods friend
Sentiment: Strong Sell
The banks only survived by gov,t back stop, the price then was correct. The energy industry won't get a bail out. Generally the bond market forecasts trouble first
As well Zan when looking into investing in a company there is a saying, The bond Market Never Lies.... meaning look at where the debt is trading to see what the real sentiment is. Stock prices can be wild in to under $5 range, especially under a $1. But bond prices tend to reflect the real risk
"Allow" If it happens it won't be by choice. If you can't meet your obligations They can't control the oil price anymore then you or I. Management in Bk always (99%) act out of self interest. They get deals where they stay on and receive equity in the new formed company to manage the transition.
MLP's tend to have more conservative leverage and assets that are mature which means a low decline rate and require low maint. cap to maintain production. Less cap intensive. They will survive longer in a downturn for that reason. Good management is important, but the asset base is first on the list. IMHO
feels like close to a bottom. depends on the CC for q2 and see how much margins have compressed. I warned you all.
yes I do, it increase the margins company wide because the asset sold was basically NG production and NGL. It'll lower G&A and other fixed cost by eliminating the need for a east Texas office. Considering no hedges on Ng in 2016 it's a smart move to increase liquidity, lower corp expense and increase company wide margin per barrel. That's the short answer.
Here's the positive in the oil sector virtually all are down 50%, it gives you a chance to sell to worst in your portfolio and high-grade into a fundamentally stronger company that has been slaughtered as well.
Generally if the oil price stays low the high graded ones will survive and have the ability to buy assets in BK and expand production, like AREX and BBG.
In this environment don't swing for the fences, all or nothing, you can do better long term preserving your capital in company with great assets that don't have a restructuring risk in the next 2 years.
My list includes:
AREX, BBG, REXX, PVA, EVEP, JPEP, MEP, HCLP DNR, BBEP
REN, PWE, (in my high risk high reward protfolio)
Darn I thought i post 1-9,
Okay the short list
1) proved reserves, oil ng, ngl, what % is developed
3)debt and structure
7)shares out, insider % ownership
8)debt per proved reserve, debt per flowing barrel, interest servicing cost per barrel
9) annual rev - cost of rev, cash G&A, debt servicing and maint. cap
9) a) what is the maint. cap to sustain current production (Maintenance Capital expenditures= cash amount to keep production at a flat level year in year out, it's higher in shale plays because you get most of your production volumes in the first 2-3 years, they decline rapidly.
These are the answers I look at when looking to invest, if it looks promising then I do into a deep analysis..
Hope this helps.
What oil stocks do you own btw/
Sentiment: Strong Buy
Ip isn't as important as it use to be, i'd wait to see the 30-60 rate and see how it ramps up.
in general there are multiple reasons a well can seem lack-luster, In general, they bore didn't land in the zone as excepted, it also depends on the number of frac stages, lateral length, whether all the plugs were drilled out, clay content, etc, etc, to just look at the ip without all the other info is useless in determining a wells success. How much did the well cost, if it were a short lateral because shape of the lease bumping up against it's boundary or applying a restrictive choke to keep pressure in the well and ensuring a greater eur, to restrict to get a higher oil to gas ratio.....it's the specifics of that well....
Sentiment: Strong Buy
Arex is likely a safer play as is bbg, back to PWE....but they have 9x the production of Ren and only 2 x the debt and it conventional production which means lower decline rates and the land position is pretty substantial.
KEG is an oil service company not to be compared to CRK or PWE, they are upstream e&p's and you can't compare it to ORIG because it's a offshore driller. To figure out it's value compare to others in the same industry which is onshore drilling like CJES for example, and there book value is tied not to reserves but equipment (kind of a black box currently because there is a glut f stacked rigs, ) that depreciates the older they gets and within drill ships there are units in demand and others that you can't get contracted because of the horsepower, tech limitations etc. I would stay away from service companies because of the over capacity in North America built up during the boom, many driller will go BK. There margins have been crushed.
And be careful just looking at book value. The most important thing in this environment is the ability to generate cashflow and stay solvent. Many asset rich (high book value) cash poor companies(inability to service interest on debt and fund mant. cap to keep barrels flowing) have gone or diluted the value and upside out of their stock in past down cycles. If you find a company whose assets are trading at a discount then read the 10k look at debt, cost to carry it, if any debt is maturing soon and look at their production and figure out what type of cashflow they will generate in the next 12-24months. Do they have hedges? Can their production generate a survivable margin based on the current 12 month strip pricing...etc...etc...
Plus book values have to be manually figured out, meaning read the 10k and remember land is carried at cost. If a company bought 100k acreage in the EFS at the peak of the market chances are the value is overstated where as if a company has land they bought years ago it's most likely worth a lot more now.
I generally look a proved reserves and production profile to start, then IRR in those plays, then debt structure, etc.
So out of the two comstock and Penn, I'd start analyzing PWE
They are too small and have little opportunity to grow. The cali oil asset is mature and declining, The Marcellus shale acreage is good but small and more importantly will require a lot more capital then they have to develop.
It's about scale to cover fixed cost, they don't have the acreage or access to capital to buy the acreage to grow the company. Oil and Gas is a very capital intensive business.
Just my snap judgement. Too small for me to consider.
How will they grow? Will, they could reverse split and recap.... but they already have 400+ million in debt...too risky,
I agree....And to clear up evaluation, not all acreage is the same, as well as production or capital structure.
Example : 2 company, say A and B, each can have the identical shares out, balance sheet, acreage, production and net debt. But A's stock is $50 and B's is $30 and each is fairly valued. The answer lies within the structure of their debt. (interest rate, secured, unsecured, maturities, etc.
PVA has a very favorable debt structure. most debt is unsecured 1.075billion under %8 interest of year, the convertible PR interest rate 6% with no put option and dividend can be paid in stock, 162 million drawn on their 425 million senior secure revolver under 2% interest "As of March 31, 2015 , the actual interest rate on the outstanding borrowings under the Revolver was 1.9375%" from 10k
PVA has a challenge if oil prices stay below $50 into 2017 but I believe we will be in the $80 by then. They need high 60's to remain viable long term.
Investing has risk so in plain terms: buying here is a down 1 up 3.5 risk return in 2017-18 or $2.30 downside target $12 upside target 2017-2018