Ruby: Thanks for the reply on BWP. As for the board etiquette remark, I was unaware of such a sweeping generalization and every board I am on has frequent posts directed to specific avatars simply in order to make sure their questions are noted by the people they are directed to or want to hear from -- particularly on an OT topic where most posters dont have broad holdings and might not be educated on. And I am certainly not "dumping" on anyone by extending some respect to posters whose opinions I know enough about generally to want to hear from.. Sorry if you thought my note offensive.
In the interest of a public test on board etiquette, I would appreciate everyone giving this post a thumbs down if they were offended that I asked an Off Topic question to a pair of the more regular posters. If no umbrage taken, give me a thumbs up. Maybe we can all learn a bit from this exercise. Thanks to everyone
GE has floated the idea of focusing ops on only the Marcellus and Utica plays, leading us to consider what the value of the Williston acreage is if divested. Given the information provided in the presentations, I calculate the bad half of the acreage to have a GE estimated value of about $160m +/- 15% (since he uses ranges).
How do I get there? GE says we have 152,000 acres in Williston and 50,000 of those are in Canada. Slide 52 appears to state that all Canadian acreage is valued between $87m and $110m (call it $98m) and then has Non-core non-op north Dakota listed as $50m-$75m (call it 62m) or $160m between the two. Looking at acreage, GE has told us we are looking at 50,000 Canadian acres. Thinking the non-core ND acreage to be at the low end of his 3000-5000 value per acre on slide 55, and dividing the $62m midpoint by $3000, my guess is this proposed acreage sale involves approximately 21,000 acres and likely a little more. Thus, my conclusion that the proposed divestitures involve approximately 75,000 or half the Williston acreage.
As for the other half? It is a guessing game, but my guess is the acreage is probably worth north of $525m. I arrive at this figure using the $5000 high value for the roughly 25,000 undeveloped acres not sold as non-core ND acreage ($125m) plus some higher value ($8000 an acre) for the 50,000 proved and developed acreage ($400m) for a total of $525m. Of course, if GE can get 10,000 an acre for proved and producing acreage it would be better, but given my familiarity with Bakken acreage sales as a heavy KOG investor, I suspect 8,000 is likely tops for MHRs acreage.
Please poke holes in my rough estimate, but my rough guess is MHR would make around $500m if it sold its Williston producing and core undeveloped acreage (that is, the acreage not already for sale). Lex
As expected, giant increase in reserves and general metrics of business, which is all excellent. What is also great (IMO) is the projection of 36,000 to 38,000 avg daily production in first quarter of 2014. Seems to me that this means two things: (1) the weather had not destroyed Kog's first quarter, and (2) Kog's 1st quarter results will be great with big production in a rising price environment. Go longs! Lex
Oilman. You are so full of it. I used to have nice exchanges with you and because of you I ffirst bought hk at 7 and sold around 6. Then bought again at 5 and sold at 4.50. Came to think my trust in you was misplaced but I keep watching HK. Knew you were a longtime mhr holder since I was over at mhr myself for 3 yrs. I innocently asked you your rationale for selling ans when I asked a follow up question you climbed up my shorts like you do with value man and others who threaten your intellect. It was then I learned that not only was my former respect for your views misplaced, but you were a complete #$%$. AND you didn't know much about mhr anymore. And you don't. So yes I like to rub your face in it since you started being such a jerk. What tells me the most about your character or lack thereof is you can never admit to anything. Ever. So you are dishonest as well. Too bad you are not that smart. I am not saying as smart as you think you are, I am saying not that smart period. Go ahead and send me another of your inane responses ....
I save all the MHR corporate presentations so I can look back and see how items have changed. Comparing the Feb presentation slide 51 (near term Marcellus and Utica wells to come on line) to the January similar presentation, I note there are two big differences. First, the four Collins wells in Tyler County (two of which had monster test results and two that were going to be tested shortly after the December 23 press release) are no longer on the near term list allowing a reasonable inference to be drawn that those wells are now hooked up and flowing into production lines. Second, and similarly, the January presentation lists 8 Mills-Wetzel wells, whereas the new/Feb presentation only shows 4 of them, suggesting four of these wells (the even numbered wells 16,18,20, and 22) are also now on line. If the reasonable inferences are accurate, then MHR will have production from these 8 new wells for at least 2 months of Q1 of 2014 and that is very good news. Hope my analysis is correct! Lex
What an absolutely ridiculous economic argument you make. Cant pick which one is sillier: the comment on the people growing up in the 50s and 60s having it all on a silver platter, or the one about raising 5 or 6 kids on minimimum wage, or the one about the only thing that matters is tax inequality. What a long winded lecture from someone that obviously doesnt have a clue about history or economics.
I am not taking issue with your second paragraph as much of what you say there is fairly accurate, but that first paragraph is nothing more than a fool's jibberish.... and that's coming from someong not in your target audience you are so interested in telling off. Please go back into your hole until you have a bit more common sense.
Oakfield: I am a softbasher because I provide a balanced commentary with SPECIFICS on both good and bad? You would prefer moronic hyping and/or moronic bashing like sdfoster? Would that be simpler for you to follow?
Sure am glad no one listened to your "all knowing" remarks about MHR and how the rest of us don't know anything. What's the IRR on gas wells that test over 32,000 mmcf a day? MHR will hit 9 this morning and you would have had a 100% gain had you hung in there, rather than your 40% loss. Oh well... Tell me again how smart you are.... please.
Upton: Your H...d on for Bush is showing again. Why is it you blame GW for absolutely everything, but never give any "credit" to the democratic congressional majority for the last half of his tenure that controlled most of his moves? You are an illogical broken-record with your constant political rants. Can you maybe get back on point with discussing investments on an investment message board? Maybe just consider it? A little bit?
Big picture, the update has some very good news re the Collins pad wells and problems because of so much condensate; however, looking at the short term, it is a significant attempt to gloss over the fact that so much of what GE has been representing as events to happen before the end of year were simply wrong. Those things might happen by May or June of next year, but NOT before year end as represented. In fact, none of the three significant pads are going to be on line by year end with Ormet gathering system only 80% complete, Stalder not complete, and Collins requiring a lot of infrastructure upgrades for liquids and compression before it will be ready in March (or later). While some of these issues are "good problems to have" in the longer term, GE is acknowledging he has over promised and under delivered in a big way within each of the Oct, Nov, and Dec corporate presentations and he HAD TO KNOW THAT but put the estimates out none the less. I have noted before my belief that the 3rd Qtr of 2014 will show MHR as a significantly different company than it is now and this update appears to confirm it will take that long for a lot of the good news to actually be realized as production. Looking at estimated CAPEX budget for 2014, I would think MHR would be well-served to double the pipeline expenditures right now to address both the currently identified issues plus what must be coming as additional issues if the well volumes in the area of the system are as good as they are. Notice not a word in the release addressing Utica drilling. Another deflected issue? My two cents.... Lex
Yes, it has been a good year. Certainly better than last year when nothing seemed to go right and the PPS cratered with the mid year (May)share issuance.
Personally, I consider your comment about a double from here within a year pretty darn ambitious absent some major Utica well results. GE might get the production figure you noted with a few high volume Marcellus wells, but they are gas, so the revenue will not be like oil/liquids revenue, which is more of what MHR needs to move to CF positive and get earnings of $1.00 or so to support a $15 share price with the debt it has. BUT, I certainly hope you are right (and we get some big Utica well news).
Since MHR has been issuing two reserve reports for the last several years, hopefully the Utica well news will come out early enough to impact the mid-year report. Here's a wish to all the longs for a happy and prosperous 2014/ Lex
Seriously? Do you have any clue about what you are talking about? Rail transport restrictions will be for oil coming out of Bakken, not gas or NGLs coming out of Marcellus and Utica plays. MHR's pipeline has nothing to do with oil transportation and yet you think it just doubled or tripled in value? I usually don't like to bag on posters for their ignorance, but your post simply takes the cake today......
Ditto on Masayo's comment, although I trust part of the delay is to (hopefully) release some very positive information at or about the same time as the 4Qtr results that are not going to look good for year over year comparison. In the Dec 20 press release, GE indicated he would likely have Stalder pad Utica well test results "by the beginning of January," so the testing had to be imminent. Admittedly, that was before the big freeze hit the Midwest, but he should have them in pocket now and, distrustful as I am, I wouldn't be surprised to learn they are good and leaked out last week when the volume and PPS spiked. Hopefully that was the reason, although I am keeping my fingers crossed. SOMETHING caused volume to go to $12mil last Thrusday.
For what its worth, I would be VERY CAREFUL acting upon Oilman's short thesis for MHR because he has repeatedly missed the boat on his analysis. He sold at $4.75 and is upset that MHR touched $8 today -- thus, it must be overpriced. Making matters worse, he shifted completely out of MHR and into HK and, while MHR is up about 65% since his sale, HK is down about 60%. Ouch and Ouch again!
While I tend to agree that MHR may have a short term pullback when they announce 4Q numbers -- due primarily to the fact 3 pads and numerous wells that were expected to be brought on line before year end have had pipeline hook up delays -- MHR has announced some great new well results, it's next few reserve reports will reflect substantial increases; and its pipeline has proved to be an OUTSTANDING asset only getting better by the day given the lack of infrastructure in the Utica. All of these factors suggest listening to Oilman's comments on MHR may not be the best thing to do.
Just my two cents from someone with decent insight into both companies. Lex
Looking at Slide 27 from MHRs January presentation, the general proximity of MHR acreage to Antero's top producing wells IS very impressive PROVIDED the sweet spot extends to the southern edge of Noble County. the Consul wells just to the north of Farley are also impressive.
Having read the Antero announcement, I have to admit my frustration with the lack of news coming out of MHR on Utica drilling. Antero had five major wells tested in the 4th quarter in the Utica and we don't hear jack.... Just how slow is MHR going? MHR spud its Farley pad in April 2013 and we don't have a second well to announce yet? MHRs presentation recites the Alpha super rig spud its second Stalder pad well on Aug 28 and now five friggin months later, we still don't have results? The joke is that MHRs presentation states the Alpha rig will drill 16 to 18 Stalder pad wells over 18 months and we are now at month 9 and don't have results from even the second well. I appreciate we don't have pipeline hookups, but still..... A loyal, but frustrated, long... Lex
As you probably know, I am a strong backer of MHR looking into the future. That said, I am fairly confident that MHRs performance is not going to look very good until the second quarter of 2014 and, in the meantime, the EOY press releases are going to look marginal at best. Marginal, because GE will continue his spin efforts to get everyone focused on a bright future, but otherwise not so good because the EOY production numbers are simply going to look bad for a number of reasons. First, my educated guess is that MHR's exit rate "may" be as high as 15,000 a day but it may be more like 13,000 (or even lower) because none of the significant Marcellus pads came on line during the 4th qtr. Look at the Nov 8 press release, which was the last word on production rates, and the third quarter production was only 10,000 a day with another 3500 or so of "adjusted production" put back on line by mid-October. GE avoided any direct representation re current production in that release, but my guess is the number was around 13,000 a day and I don't know of any significant wells added since then. Some of the Bakken wells were likely added and maybe (I am admittedly uncertain) some of the Stone JV wells that we have a 40% NRI in came on line, but that is likely it. All in all, MHRs production in Q1 and Q2 of 2013 will prove significantly higher than Q3 and Q4; the exit rate may be around 13,000 or so, and the average production for the year will be around 14,000-15,000...... maybe.
GE has a bright story to tell re the future, in large part because of the pipeline and lot of 2013 projected activity that will be realized 2-5 months late, but I fear the story he is going to be telling about he end of 2013 is not going to look good. Revenue and Ebitdax fell from 84 m and 38.5m respectively in the 2nd qtr, to 54m and 28m during the 3rd quarter, and I would not be surprised if both figures dropped again in the 4th qtr. Tell me what I am missing (hopefully a lot). Lex
WOW.... where does all that come from Oilman? When have I ever suggested being "always right" when I just conceded you might be right about an upcoming pullback? And when have we ever even had a disagreement before? -- I am not on any boards that much and have never argued with you that I recall; in fact, I used to argue with Valueman for the same reasons you did while I was invested in HK. This time, I just gave my two cents in reaction to your post backed up with three specific reasons for my views. Funny, you didn't respond to any of those specifics in your ranting reply.
If you read my posts on MHR, you would know I have noted several recent problems with MHR and, like you suggest, just yesterday took a LOT of profits off the table for just those reasons. How is it that someone writes balanced analysis with details, to which you don't even respond, and yet then claim you know FAR more than I ever will about the prospects? -- you have no clue what I know and don't know. The irony of all this is I wrote my note involving caution on your short thesis because YOU always act like you know all the answers, when my point was you don't.
heck, some other posters might draw the reasonable inference that I know a lot more than you based on my 65% gain in MHR coupled with your $80k loss in HK for the same period. But good luck to you Oilman; I hope the rest of your day goes better...
Rat: You hit the nail on the head; I am so sick of hearing Welbie cry about all of Kadenstorm's aliases and all the other abusive ad hominem insults hurled back and forth every day. It truly is senseless and it has ruined the board. Heck, it is hard to read any analysis any more as half the posters are on ignore. Have a good weekend. Your trips sound wonderful. Lex
Never bad to take some profits off the table, but making a complete exodus seems odd since you are only 2 months away from what I suspect are LTCGs. Assuming you are in the 28-33% tax bracket, you are going to be paying 30% tax on those gains vs 15% LT rate so you effectively just "bought" your own 15% decline when you were worried about 20%
As for the equity issuance, I sure hope it is not 40mil as we already have about 15-17 mil of shares coming with the 10% dilution warrants. 20 mil shares at 8 would be 160m and 150m from warrants would get MHR 300m -- which I think should be plenty given potential asset sales