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ChipMOS TECHNOLOGIES (Bermuda) LTD. Message Board

jj_js_007 43 posts  |  Last Activity: Dec 23, 2014 9:39 PM Member since: Sep 1, 2006
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  • Reply to

    WRES Christmas Wish

    by kenglowacki Dec 22, 2014 3:02 PM
    jj_js_007 jj_js_007 Dec 23, 2014 9:39 PM Flag

    I agreed. They were in the same situation in 2009 and almost BK. After that, they hedged not to profit from it but to protect cash flow. They have to as they just borrowed more than $300MM. Now, they are in deep hole. Very deep hole if gas price doesn't recover fast.

    However, one thing that I would agree with Arm is that it is hard to hedge Marcellus gas prices. An example, today, Nymex is up but Marcellus tumbled to less than a dollar (Yup, you heard this correctly. Less than a dollar. This is way below operational cost and we have not even counted the capex investment.

    Honestly, the only thing that realistically matters for WRES now is a very cold Northeast in the next 3 months. If not, it is game over even if oil price average around $70 or $64 CMS.

    Damm...

  • Reply to

    WRES Christmas Wish

    by kenglowacki Dec 22, 2014 3:02 PM
    jj_js_007 jj_js_007 Dec 22, 2014 10:14 PM Flag

    It seemed that WRES cannot get a break. Based on next year's production guidance, every $1 of oil price is equivalent to about $0.03 of natural gas . So, while this stock tracks the oil price, we are impacted by gas price than oil price. And we have been hammered by gas lately. The only saving grace is that Marcellus gas price does not exactly track NYMEX price. However, our P&G contract as well as Wyoming are dependent on NYMEX price.

    Damm. The luckiest person in the world is Lance. If you looked at Citrus P&L, they were heavily in debt and losing money. He sold Marcellus at a great price to WRES at the time when gas price peaked, escaped the rout, with millions in his pocket now after paying the debt of his company. He should have at least 50MM and 3+ millions of WRES shares, the only hit he took. Now, he is back as CEO. Bought a few thousand shares and his millions of shares benefited . He is a real lucky guy.

  • Reply to

    WOW! This climb has been unbelievable

    by jj_js_007 Dec 17, 2014 4:50 PM
    jj_js_007 jj_js_007 Dec 20, 2014 3:12 PM Flag

    Transportation revenue is from the pipeline we own in Wyoming. The getting the revenue from themselves as well as other producers who used the pipeline. That's why they booked it under transportation revenue. The realized gas price is industry standard term and already include transportation expense. Operating cost or lease line does not include transportation expense. That's my understanding.

  • Reply to

    WOW! This climb has been unbelievable

    by jj_js_007 Dec 17, 2014 4:50 PM
    jj_js_007 jj_js_007 Dec 19, 2014 8:08 PM Flag

    My 2015 projection was to see whether they need to draw their revolver if things stay the same as they are now. I think they will need to, unfortunately.

    If you go back a couple of quarters before Marcellus acquisition, the transportation cost is already there. It will be either for Wilmington or Wyoming. For Wyoming, they owned the pipeline, so not sure how the accounting is done.

    The realized gas price they reported are NET of transportation costs. This is standard for all oil and gas company. I have also went back to get the cash price from Aug 11th to Sept 30th and this average out to be 3.91. For the same period, Marcellus average out to be 2.08. Now, use this formula:(
    (volume for P&G x Henry Hub Average - transportation cost (0.62) +0.03
    (volume for the rest of Marcellus X Marcellus price)
    (volume for Wyoming X Henry Hub - transportation cost (0.73)
    You will get very close to realized price of 2.73 that they reported.

    Personally, I'm looking to reduce my exposure when it hit $2.5. This down and up ride have been breathtaking and but not my style. I think with current prices for gas and oil, fundamentally, 2015 is a ride out year unless oil change drastically. Gas price needs to go up pretty fast the next two months as that is the peak period time. It has been a bit of a disappointment for me with Marcellus gas at $2 range. We are almost a dollar lower now than last year for Henry Hub.

    SO, waiting for $2.5...

  • Reply to

    WOW! This climb has been unbelievable

    by jj_js_007 Dec 17, 2014 4:50 PM
    jj_js_007 jj_js_007 Dec 18, 2014 8:42 AM Flag

    Existing wells. They are not putting new capex to drill for oil next year unless the economics change. $55 will translate to $49-50 CMS price which is WRES realized price. The no hedging is really killing our cash flow.

  • Reply to

    WOW! This climb has been unbelievable

    by jj_js_007 Dec 17, 2014 4:50 PM
    jj_js_007 jj_js_007 Dec 17, 2014 7:37 PM Flag

    Actually I do think the the oversupply is in 2015. Like WRES, although we stopped drilling new wells, existing wells that have been drilled will keep producing. We will be producing almost a million barrels next year without new capex. 2016 is when the supply will get corrected. WRES stock may have recovered by then but the CMS price will still be depressed until then. Next year will be a lost year I think.

    I also think that oil may settled higher but it will not be in the $100 next year. Maybe in the $70 but who knows.

  • Now, I'm in a dilemma - to sell or not to sell. Just afraid that this is a rebound rally from oversold or short squeeze. Fundamentals of gas and oil gas prices are still pretty bad for now..

    For the knowledgeable ones in this board, what do you think?

    Here's my 2015 projection that is putting a some doubts in me. Still holding a big chunk now and wondering whether I should let go some:

    Cash flow basis:
    Revenue - Oil..................(950@$50) = $47.5M
    Revenue - Gas................(36,500@$3) = $109.5
    Revenue - transportation......................= $4M
    Total Revenue 2015.............................= $161M - which is an increase to this year

    Cost - Operations and Lease................=$60M
    Cost - Capex.........................................=$80M (Note this is not DDA as I wanted to know their cash flow)
    Cost - Transportation expense..............= $2M
    Cost - G&A............................................= $12M
    Cost - Interest expense.........................=$30M
    Total cost 2015......................................=$184M

    Revolver to be drawn..........................$23M

    Assumption of $3 realized gas price:
    - Marcellus is currently running @2.25 average for 4Q'15
    - Henry Hub is running @3.8 but need to take out transportation cost of 0.62 for Marcellus and 0.73 for - Wyoming
    - expecting that the 1Q'15 gas price will be higher and the rest of the quarters average
    - Expecting that P&G contract price will get renewed at slightly above current Marcellus price in Jun 2015
    - Included the hedging of gas

    Assumption of $50 gas price (note this is CMS price which is about $6 lower than WTI)
    - I think this will the range for 2015
    - Every dollar increase in old price will increase our revenue by $1M

    Comments?

  • Reply to

    PRO 4Q14 Earnings Projections

    by armchairprophit Dec 10, 2014 6:04 PM
    jj_js_007 jj_js_007 Dec 15, 2014 10:36 PM Flag

    There is going to be a decline but not immediate. The shale oil will decline within 3 years but almost at half life rate. It is all about survival now. I would have hope that oil can drop QUICKLY to 40's then recover quickly. If not it, will be a slow death for many small E&P. My model at realized oil of $50 and gas at $3 is showing negative EPS for 1Q'15. Currently we are below both realized prices. I think the market may have priced this in. What are not priced in are drawing from revolver (many are predicting incorrectly we will use cash flow = capex, and breaching of debt convenant (we will be very close in 1Q'15)

  • Reply to

    PRO 4Q14 Earnings Projections

    by armchairprophit Dec 10, 2014 6:04 PM
    jj_js_007 jj_js_007 Dec 15, 2014 6:05 PM Flag

    Here's my reluctant challenge as I do not want to jinx the upward movement of the share price now:
    1. Gas volume - 7,000 MMCF instead of 9,100 you have. They have reaffirmed this number twice and I'm going to take it
    2. Wyoming price should be Henry hub - 0.73 (transportation). You already accounted for transportation revenue in Wyoming. My average realized price is 2.43 (Marcellus price, P&G contract, and Henry Hub considerations)
    3. Lease and DDA are the ones I'm not sure of. I have them about the same as yours. For DDA, I have seen the number from analyst from 17M to 23M. Not sure how they come up the number
    4. Interest expense 7.7M

    As mentioned, with hedging, WRES will be okay. The EPS is going to be slight negative or positive based on lease and DDA. The number I'm really interested in is 1Q'15. Need to see how much they draw on the revolver as this will quickly allow us to access how much they are burning cash (based on gas price and oil prices and their expected capex, they will have to use their revolver)

  • jj_js_007 jj_js_007 Dec 10, 2014 4:01 PM Flag

    they have to dig 25 wells to keep the lease. That's why not hedging is such a big mess

  • Reply to

    NatGAs Hedges for 2015

    by sumark4221 Dec 10, 2014 10:02 AM
    jj_js_007 jj_js_007 Dec 10, 2014 3:59 PM Flag

    That's the contract with P&G. They will sell up to 45,000 MMbtu and last quarter, they sold I believe 37,000. The price is ridiculous for WRES. Nymex +0.03. However, you need to take out the transportation cost of about 0.62 per MMcf.

    This is another area they are not going to get this price anymore. I believe it was contracted a few years ago when Marcelluss price is higher than Nymex price. It will be interesting what they get. Perhaps more volume and lower price

  • Reply to

    NatGAs Hedges for 2015

    by sumark4221 Dec 10, 2014 10:02 AM
    jj_js_007 jj_js_007 Dec 10, 2014 3:54 PM Flag

    I knew it already. They were mentioned as asterisk as it has been taken into account under GAAP as part of the purchase. So, the pro forma is more FY14. However, their guidance pointed to about 7,000MMcf for Q4. That's what I use. What's change from Q3 to Q4 is the costs. You will find that the leasing and operations, the interests and the DDA all will go up. I hope your model is right. I just don't see it in my money at the prices I assumed

  • jj_js_007 jj_js_007 Dec 10, 2014 1:37 PM Flag

    They already using their revolver for additional $10M. They have about $95M left instead of the reported $105M. You can do the math. I'm not sure how they can fund it or they are expecting improvement in prices.

  • Reply to

    NatGAs Hedges for 2015

    by sumark4221 Dec 10, 2014 10:02 AM
    jj_js_007 jj_js_007 Dec 10, 2014 1:34 PM Flag

    They don't have a problem with takeaway. They already contracted this for 4 years (I believe). The problem with Marcellus price with such a high differentials is that there are limited takeaways (and hence the transportation cost is high) and that they are ample supply to the local areas (decrease demand and price). Both of this are baked into the reported realized price.

    As the takeaway capacity is build to link to a wider network, places where the gas is in demand will get gas. This may reduce the overall Nymex or Henry Hub price but will increase Marcellus price.

  • Reply to

    NatGAs Hedges for 2015

    by sumark4221 Dec 10, 2014 10:02 AM
    jj_js_007 jj_js_007 Dec 10, 2014 10:38 AM Flag

    The hedges were put in place before Marcellus acquisition. The volume from Marcellus is much more significant than the hedges. Having said that, hedges for Marcellus price is really not effective. They will need to find other hedging instruments.

  • jj_js_007 jj_js_007 Dec 10, 2014 10:35 AM Flag

    Here the good news and bad news from the guidance:

    Good news:
    - Oil breakeven is lower than we thought @45
    - Reduction in capex for oil

    Bad news:
    - Marcellus drilling in not self-funding (see below on simple math)
    - I would have like to hear that they have ample liquidity and that they do not expect to breach the bank convenant at current price.

    Marcellus math:
    Honestly, I was hoping the production would be higher given they have completed 3 wells. Anyway with 8,000MMcf at the high side, they will get about $20M in revenue. Costs include $5M in lease and operations, $7M in interests and now they capex of $11M per quarter for Marcellus. I think they will have to dip into the revolver.

  • Reply to

    WRES PPS

    by steelbender85 Dec 9, 2014 12:48 PM
    jj_js_007 jj_js_007 Dec 9, 2014 11:07 PM Flag

    Again, look at the September presentation and refer to the well curve for Wyoming and Marcellus. While Marcellus is producing great, the well drop off rate is pretty steep too. FOr Wyoming, it is different as it is different type of well. The drop off is not that great. I would not use the previous quarter production number. I would use their guidance. Also, we have completed 3 additional well but they will only start producing in the first quarter next year

  • Reply to

    WRES PPS

    by steelbender85 Dec 9, 2014 12:48 PM
    jj_js_007 jj_js_007 Dec 9, 2014 11:04 PM Flag

    If I'm not wrong, the cash prices published by WSJ daily already included the takeaway (transportation costs). So, for today, Marcellus is 2.23. You just need to multiply that with the Mmcf to get your revenue. This price is approximate (very close) for the WRES Marcellus price as they have fixed contracted price of ~0.63 per MMcf for certain volume. This is a good thing as many producers are paying a higher price or worse left stranded if they do not have takeaway capacity.

    For Wyoming, WRES realized price follows the Henry Hub pretty closely (slightly lower) as they don't have to pay for transportation. We owned the pipeline when we bought it from Anadarko. However, in the earnings report, you will see that the realized price is Henry Hub- 0.73 perMMcf but the transportation is reported as transportation revenue. In Fact, other producers are paying us to use the pipeline

  • Reply to

    WRES PPS

    by steelbender85 Dec 9, 2014 12:48 PM
    jj_js_007 jj_js_007 Dec 9, 2014 6:21 PM Flag

    That's in the ball park. Now, I just poured over the Marcellus acquisition filings to get first hand information rather than the BS the management trying to sell. If per quarter, Marcellus provide $17M revenue, it has about $4.5M leasing, operations expenses and $0.5M transportation expenses (from filing), and interest expense of $7M, this gives $5M net exclude DDA. DDA is $8M (from filing)...Hmmm, why acquire? Can someone verify this?

    BTW - good to go green today. It has been awhile we ended with green. Hopefully, this continues tomorrow

  • Reply to

    WRES PPS

    by steelbender85 Dec 9, 2014 12:48 PM
    jj_js_007 jj_js_007 Dec 9, 2014 4:05 PM Flag

    I took the guidance at the basis since this the closest to the real number we got. Henry Hub and Marcellus prices - go to cash prices from WSJ and compile for each day. Sunset to go Chevron site. Transportation cost for Wyoming = 0.73 (they go this back as transportation revenue). Transportation costs for Marcellus is around 0.63 from UGI. This is contracted. Go to their SEC filling for the acquisition.

IMOS
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