A very nice press release because it contains a number of specifics coupled with near term specific dates that GE should know right now if they are attainable. Great to hear. That said, and I know this comment will be called soft bashing by some, but realize the "double of production" claim results in a number that is some 2000 boepd LESS than the 2013 projected exit rate of 25,000 boepd. I say that because fourth quarter actual production was about 11,600 per day and doubling that with natural decline is less than 23,000 a day.
Big picture, MHR is simply six to nine months behind earlier projections. What sounds particularly nice to me is that projections from here on out might be attainable, provided GE gets rid of (a) the presentation slide comparing actual production to target production for growth rate estimates and (b) then gets rid of those Farley and Stalder pad estimates about 18 stalder wells in 18 months and 12 Farley wells in 12 months as those estimates have proven to be serious BS. Lex
Nosweat: thanks for the thoughtful summary; however, I am not certain I understand where you are leaning, or what conclusions you are drawing, except for the seemingly neutral "this is a critical time that bears careful watching" observation. As a long time holder, are you considering reducing your position due to all the uncertainties you remark about, or do you think BBEP will weather these uncertainties and roll back into a growth mode by Qtr 2?
Reading between the lines, it sounds as if absent price appreciation, another secondary offering to reduce leverage comes at a high price given current yield/distribution and any additional acquisitions will effectively force such an offering, so your analysis seems to suggest BBEP is grinding to a slow halt until Q3 at the closest when production rates might increase, but with some related commodity price concerns. So...at the end of the day, what is your course of action? Sell some of your position, simply hold on, or buy more on dips? Thanks for your insights. Lex
Fastbetty: THIS is your very first post ever? Adopting a new alias so you can give two posters, who actually think and comment on specific details involving company operations that you are not aware of, a hard time for actually thinking and commenting with substantive analysis? The only thing richer in irony is the 4 thumbs up on your note from the sheeple on the board. I love it. Keep up your insightful work. You are my heroine. Lex
JMS: Your question about upcoming catalysts is a fair one and I don't know if there are any that are particularly significant. From what I infer from the most recent presentation, the Collins pad and Ormet 15 pad appear operational, so our production volume should finally be moving up. I don't know if it is really a catalyst since its been a delayed item in the presentation for months now, but IF mhr can deliver on bringing the next 10 wells on line by mid April as reflected in slide 31, that is a good slug of production to get cash flow up significantly, which would be made all the better by getting the stalder well back on line. Other than that, I don't know. Could they test the Farley wells after an initial reset but before waiting for the December pip\line hookup? there appear to be another four or five decent wells to hookup in July per slide 31. other than that, I trust we are looking at completing sale of assets, selling Williston, or monetizing the pipeline, but the debt and cash flow picture you comment on are troubling. Lex
Upton: With all due respect, having you agree with me using your broken-record anti-republican mutterings leaves me totally conflicted thinking, on one hand, you have a clue and, on the other, you are clueless. Leave the politics -- especially your inconsistent and sometimes absolutely illogical mutterings -- off the investment board, will you? Your obvious agenda is not only getting old, it is lame. YOU are a democratic Rick Perry and I will let you figure out if that is an insult or a compliment. Lex
DCF: How can you say it doesnt matter; of course it does. Moreover, the issue is not April or August, but now April (with a hoped for mid year reserve report) vs December. One page says resting through the summer, but another page says it wont be on line until the very end of the year -- so likely NEXT year.
Switching gears, did anyone else notice the new Eureka Hunter slide that contemplates throughput for the pipeline several years out and over I billion mcf? Current pipeline has a design allowing for 350k, but now GE comes out with a triple that limit projection?
Finally, does it bother anyone else that the average production growth chart of 145% continues with the BS approach of using 3 years of average production only to use a BS eoy target exit rate for 2014 to obviously mislead the reader? Of course, this is on top of showing an 2013 avg production rate that includes 3 quarters of EFS production MHR did not produce and over 2000 boepd of shut in production.
I have been in love with MHR for several years, but I just dont get GE's penchant for what is obviously becoming on ongoing pattern of BS representations in the presentations that constantly change, are intentionally misleading, and proving consistently UNreliable.
I was hoping to see an end of GE's shenanigans, and now I am seeing more and more of them and I dont like it at all. JMO Lex
I need to look back, but I thought GE just said the Farley wells would be in production by mid-summer and, now, two weeks later, it is the end of the year? We NEED those wells to be on line, along with the Stalder wells, to be able to book more reserves. Again, it was GE's comments about these wells being on line by summer that led him to comment (as I recall) that MHR would be doing a mid-year reserve report. That report was going to allow for an expansion of their revolver. And now? How could so much change in two weeks?
JMS: Thanks for reviewing the new presentation and bringing this to our attention. Lex
Yes LINE has a history of ramping up on or about May 1, and in the past there has always been a quarterly distribution with an ex-dividend date around May 5 that explains why. Who knows what the trend will be this year based on monthly distributions.
I agree, post exercise; however, during the several week window period surrounding the redemption, the PPS will drop simply because the money being called is from existing shareholders, who will sell current shares to fund new share purchases (assuming there is a profit spread). Alternatively the current shareholders will not exercise the warrants, in which case MHR gets less new money and the potential for a post exercise pps increase is diminished. At least that is the way I trust it will play out.... hopefully, there will be a profit spread for all of the longs to benefit from....and....if there is, that will mean more HURT for the shorts. :-) Lex
Good luck with that timing move Slab. Always good to have extra margarita dollars lying around. But, I think it has become tough to time MHR. I admit I too caught the timing wrong on this most recent run up when I sold about 1/3 of my position around $7.40 or so in late December thinking bad production numbers would come out, it would drop to a buck cheaper (like you reference), and I would get back in, but it just kept going up. Heck it went right past $7.40 to over $9 and while I fared nicely on my January option spreads, my share count is down a bunch.
Then earnings came out and, while it dipped to $7.90 or so, I missed the bottom and, again, here it goes up on what appears to be a solid base. The longs really have to like this most recent ascent since the PPS is climbing against the limited liquidity back story AND, like today, it is going up on lower than average volume.
Anyways, I don't have much confidence being able to time this PPS anymore, so I am just holding on to what I have and living the boring life.... Nothing wrong with that, but be careful not to trade yourself out of too large a position because, in retrospect, I wish I had just sold about half of what I did. Anyways, good luck to the longs and here's wishing you safe travels in your big rig. Lex
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?
G8: Thanks for the heads up. SWN has been focused on the Brown Dense to at least some significant degree for the past year or so. How long to you think it will be before this segment of its business really takes off? Looking at 2016 option premiums, it appears a lot of people share your enthusiasm. Lex
Fastball, Just because I disagreed with you, you feel compelled to throw out the know everything card? You made a claim and I simply responded using your specific words as the launching point, and noting the specific numbers and reasons I was relying on in my reply. Isnt that how a discussion board is expected to work? As for the substance of your latest message, I admit I don't understand the recharacterization of your prior post, nor any new point you are trying to make. Lex
Forgive me, but I think this note is wildly mistaken. You claim cash flows "cant even dent the expenditures," when the capex is $87 mil for the YEAR and the pipeling had $18m in revenue for the QUARTER and it is just now ramping up? even without further growth, which is undoubtedly coming, this works out to $72m of annual revenue on your $87m of capex -- somehow it doesnt take sharp analysis to see that IS a MAJOR dent in in last years expenditures. Moreover, this $72m is a long term revenue stream vs one time buildout expense/. I will acknowledge the big reversal in capex involving Williston, but think that is primarily a question of focus on Utica in order to create reserve value while simultaneously considering sale of Willison. As for the rest of the note, I think it makes no sense at all and is simply wrong -- particularly given the strategic value of the pipeline in getting our product from a new territory to the market. Lex
Gulfport continues to rock along upward with good well results and excellent economics including $1.97 a share of net income for 2013. Now up to 165,000 Utica acres and over 32m boe reserves in Utica. Their acreage is in a better part of the play and they already have a number of Utica wells on line, so MHR comparisons involve some element of disconnect. That said, it appears MHR should be able to book some substantial reserves in Utica once we get more wells on line this year. Plus, CHECK THIS OUT, GPOR bought 8200 Utica acres with 1000 boepd production from Rhino Resources for..... wait for it ..... $185 million. We are talking $22,500 an acre! Even if super sweet spot acreage, sales like that bode well for MHRs NAV.
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.
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
Hamrick: thanks for pointing out the MHProduction matter. Interesting that the subsidiary and operations is being put up for sale before and independently of the $100m of related acreage we spoke about in a prior thread. I wonder how GE has established the value he seeks to sell for independent of the acreage; well equipment and gathering lines??? Maybe this sale involves producing wells and producing acreage whereas the other $100m is undeveloped acreage?
At some point I need to call investor relations and ask this and some other questions I have. For example, GE ducked the question during the CC about what Stalder was producing a month in by commenting on it being off line for fracking of another well on the pad and the analyst failed to ask the obvious follow up "well what was the well producing right before hyou took it off line?" From what I have read on some other company sites, the super high pressure wells have a very significant initial decline rate and I wonder what it is at Stalder. No doubt Stalder will be a significant producer, but some of the other area wells have had 50%+ rate declines in the first 30 days, so it will be interesting to see how Stalder unfolds.
thanks for taking the time to read the sec filing. Lex