At the risk of repeating myself, which I will now do, I note that the presentations that Antero puts on its website HAS to make MHR longs feel good about MHRs acreage. Look at slide 4 and see where AR designates the core areas of both the Marcellus and Utica plays and think of MHR's acreage -- either smack dab in the core, or just to the southwest of the core for Farley. In the Marcellus, see slide 22 and note how AR is moving right at MHR's Tyler County WV acreage as the focus of its drilling program. As for the Utica, look at slides 26 and 30 and you see the Farley area is just to the SW of the core highly rich/condensate that AR is focusing on and ARs dry gas Utica acreage is right on top of MHRs in Tyler county. MHR may not be producing like AR yet, but their acreage sure looks to be strongly placed. Lex
This week's Barron's article on INVN suggested an Apple Iphone win was already priced into the share price. If true, the teardown should not have great upside results, but could have significant downside results if INVN is not in the unit. FYI, the Barrons article focused on the release of the iphone, but did not comment on the related potential if INVN finds its way into the iWatch. My concern is simply that if INVN doesn't make the iPhone, I don't think it makes the iWatch either, all of which would not be good for me. Keep your fingers crossed.... Lex
Upton: Sure the democrats did -- they took an uncompromising stance that led to "counter-idiots" like Ted Cruze showing up and actually getting support. This country only functions well when the moderates of both parties realize working together is important. Your democratic boys were in the process of trying to steamroll everyone and Cruze and his idiot friends found a counterattack. Simplistic blame, like you appear to favor as a view toward all republicans, is unreasonable. Once again, you make my point. Later....
Upton???? Seriously??? YOU never debate republicans? You are always debating and taking pot shots at republicans; what a joke for you to claim this. Heck, I have slammed you myself, on multiple occasions, for taking over-the-top liberal views without factual backup for your "spectrum-edge" views and suggesting you simply be more reasonable. I will acknowledge there are the super-right wingers on this board (other's on the spectrum's edge) that deserve a challenge for your super-left leanings, but your arguments always seem to break down when you fail to recognize the rule of reason. Good luck to you, but this post of yours deserved remark as a bunch of hot air.... and I could not resist being the one to call a technical foul on you. Maybe even a bench technical for which two shots are given...
Smile now and have a good weekend. Lex
I am glad to see drilling success, but I thought TPLM's McKenzie county acreage was supposed to be strong. Is it not in the core of the play, or is it TPLM's completion techniques that keeps the well numbers below others like KOG? Any thoughts from those with more familiarity to production activities of the company?
TIA for your input, Lex
If you are comfortable enough to sell January 12.50 puts, I would think you would be better of not buying the jan 12.50 calls, but rather buying the jan $10 calls and SELLing the $12.50 calls against them. Looks like you would get the same $.40 per share credit, but you would also realize a full bull call spread and $2.50 of additional profit at a PPS of $12.50. The PPS would have to go to $15 for you to make the same $2.50 with your two-legged spread. A three-legged play has much less risk and a much higher chance to profit than the two-legged play subject of your note. I don't mean to be critical; I am just pointing out there is a lower risk play out there for most folks to consider.
Just my two cents. Lex
Antero came out with a new presentation today and I just think it could look much better for MHRs acreage position given the content of slides 11, 12, 23, 27, and 30 that appear to suggest that MHR should have great Utica wet acreage around Farley, great Ohio dry Utica Acreage in both Ohio and WV, and good wet Marcellus acreage in WV. Everyplace AR is focusing on is either right on top of MHR acreage or, in the case of Farley, in direct alignment with the play lines (dry/wet/rich/oil) with MHR simply being a bit to the southwest of ARs 1250 mbtu content well drilling. Fantastic stuff.
But then........, AR has slide 14 that quotes a study by Credit Suisse indicating MHR has the highest finding and development costs in the industry. Anyone have knowledge of this? Is the report skewed because we have been drilling Farley and other zones without production or why do we look so bad? TIA for input. Lex
I hope this view of Dentinger being a better CFO for the future based on larger company scale is accurate because Krock was no slouch. He had been CFO at five or six tech companies and he was a Cal Berkley smart guy, so I think the transition is an odd one that is not easily explainable given INVN might be making some big announcements soon and it is odd to see an officer depart a hot company. That said, his salary was not that high notwithstanding his status as second highest salary at INVN and maybe he got a good offer from somewhere else. Or maybe he was tired of stock and option restrictions as officers and wants to cash in on his $5m of related value that he can sell after 90 days.
One odd note I found in looking into this issue a bit is that Krock has not been accumulating shares over the past few years as his insider transaction history shows a regular pattern of exercising 25,000 share option packages that are immediately sold the next day -- not a pattern where he exercises and keeps a post tax obligation segment that he wants to hold long term for LTCGs. Nope he has been exercising and selling all option award share count.
Well, I agree it is all about flexibility, but suggesting the timing is right because of Relational possiblly selling into a rally from where we are now? $6.50 to $7.25 is an 11.5% quick rally. Sell at $7.25 and make a friggin quarter dollar per share? Maybe if there is a GIANT rally, but I don't see that without some really big test results. Maybe that is coming, but if it is coming, why not wait to file in a few weeks when they are in a profit position?
IMO, I think it is damaging to their own interests to file this right now, unless they want out. They got in and found things weren't quite as rosy as expected and maybe, just maybe, they DO want to sell at $7 after buying at $7 and move on.....
I have made some very good returns in oil and gas investing, and I have had some real stinkers as well. One of those was ATPG, which hired a new CEO who got a boatload of shares on the hire, and he resigned a week or so later. He wanted out and he was right to want out as the company went into bankruptcy a few months later. I am not suggesting MHR is going into bankruptcy or anything like that, I am just saying there are circumstances when smart people get into something and then want out because, when they learn additional information, they come to feel they have better opportunities elsewhere and things were not quite as represented going in.
Why not wait until Relational had at least some amount of profits to file? If the PPS were $8 at the time of filing, I would think nothing of it. Just doesn't smell right to me given the timing.
Anyways, here's hoping the board has a nice weekend. Will be interesting to see what happens Monday. Lex
Well, that surely doesn't look good. The selling shareholder is the Relational group who are registering to sell approximately 75 percent of their 32 million shares purchased only several months ago. Maybe this is a common practice for a PIPE investment like Relational made in order to maximize flexibility, but I just don't see how this type of filing so soon after the PIPE purchase, particularly when the share price has dropped, is a good thing as it seems suggestive of Relational "wanting out" rather than being a long term holder. I am interested in hearing what some of the other posters think.... Lex
JD Baker: If I may add a little color to the discussion. Win is spot on about what choke refers to, and I would add it is always expressed as a fraction with 64 as its denominator. Thus, the 28/64 choke in your previous note means the orifice was over 50% closed and was 7/16ths open. In an earlier post Win noted that 24 hour rates are somewhat meaningless and that is true without reference to choke sizes. For example, BEXP used to come out with great sounding initial well results because they kept the choke wide open and allowed max flow for 24 hour results, but that is not good for the reservoir and tends to mess with the sand/proppant in the fracks, so operators have gotten away from that. Indeed, many don't even publish 24 hour rates because they bring the wells on very slowly and don't even have them at sustained flows until day 15 or later -- which is why 30 and 60 day rates are recognized as much more important. Lex
FWIW, it seems to me to be an odd time to sell with (a) oil already down and (b) Sept 8 announcement around the corner that should be very positive based on (1) status of well completions and increase in production, (2) full quarter Rockpile three spread contribution, and (3) likely additional super-positive remarks about how next quarter should be even better than Q2 given more of (1) and (2) and increased efficiencies. Moreover, while TPLM doesn't have the best or highest percentage of hedges, they do have a substantial book of hedges that lowers their sensitivity to interim oil price declines and, even though a non-cash item, the mark to market effect of the price decline will make this Qs earnings sound FANTASTIC, which may well lead to an even higher bump.
Good luck, but I think the time is right to simply hold on to TPLM and see what happens between now and Sept 15. And one last supporting thought is the market (I am about 95% sure) has gone up the last five years in a row in the 10-15 days after Labor Day as the summer vacation period ends and the big NY traders return to focus on business. Lex
No is the answer to your Q re PV-10 values as most of MHRs acreage has no booked reserves. His presentation numbers ARE ND getting divested and the pipeline monetized at $600m for MHR share.
Too risky for me. Heck, even GE doesn't value company above $12 -- midpoint value given by GE on slide 102 is $11.75 a share and you know those are optimistic values as GE's previous asset sales rarely, if ever, realize even the bottom of his value range. Good luck, but those are fun money, take a flyer, types of spreads where you almost have to plan to lose all your money and I don't invest that way. But good luck to you....
The Jan 2016 leaps might be a tad expensive based on current share price and a short term perspective, but given where the MHR share price has been earlier this year floating around $9 for several months, the premiums are not high at all looking out 17 months. Moreover, when premiums are high, that situation exists across the board of all strike prices, which is why is makes sense to sell the higher strike calls as part of a spread. Sure you reduce your potential a bit, but how much potential are you really worried about? For example, the spreads I mentioned above allow you to more than triple your money at $10 -- roughly the equivalent of the share price going from $6.50 today to over $20 in Jan 2016. Certainly in that context the Leap premiums are NOT expensive. And, if GE's comments in yesterday's TV interview are accurate about the last quarter's results just being the beginning as we bring on some of top leases in the M and U plays, then January 2016 should be looking strong.
GE is here: As for your other comment regarding 2015 options, I agree Feb is a typically a better option than January as it allows the end of year news cycle to play out more, the new year news cycle to gain more traction, and the overall market's typical new year enthusiasm to build. I think it also allows time for news regarding an updated reserve report to come out, which may well be VERY significant if GE does get all his scheduled wells on line as that will allow all the adjacent blocks of acreage to be moved to proved reserves. Lex
GE is here:
Fair enough on the two items you comment on because they are flowing back and/or simply shut in. But Slide 49 of current presentation has 3 more Stalder Utica wells, and 4 Utica wells they haven't even named yet, coming on line on 12.31.2014 representing some 17,750 boepd of new production (over and above the existing Stalder, plus Stew-Win, plus Mills-Wetzel wells) that I think is simply BS in terms of GE's timeline.
As for the big picture, I remain convinced we are looking at a 2015 story in order to see much more than a possible rebound to $8 from here. Consistent with that view, I sold my last 10,000 shares before the last quarterly announcement but I have been around too long, and feel too strongly about the positive times I see ahead, to simply walk away altogether. So I replaced my shares with two 150 contract bull call leap spreads for January 2016 between 5/10 and 7/10. So I am still long 30k shares, but admittedly they are all options. I break even at $6.28 per share and hope to more than triple my money with LTCG tax treatment if MHR gets over $10 seventeen months from now. May the "force be with us both" over the long haul and GLTA the longs.
GE is here:
Do you really think GE "built in a buffer" when he keeps proclaiming that suddenly he will have about 10 new wells come on line the end of December? I am with you in the belief MHR will ultimately "get there," but GE has "misgauged" the timing of the last 10 events he put a timeline on. Realize we STILL are not producing at last December's proclaimed exit rate. One might suggest that a meaningful "buffer" for GE would be a full calendar year as his average miss is at least six months. (All this from a loyal long). Lex
Sorry Nate. I just realized you were talking about Utica acreage, not the Bakken acreage that I had recently seen a post about. You are right about the 10,000 per acre Utica prices, with the big January sale by Hess having the highest price (yet realize that had good liquids and was already in zone with pipeline access for development). Interestingly, GE has put values in the presentation for wet acreage in Utica that are LESS than dry acreage values. See, e.g., May slide 53. Lex
Your 10k figure is correct for better acreage with wells having significantly higher EURs, but I don't think that is a good figure for mhr acreage. in fact, GE puts a value of $3000 to $5000 an acre on half/50,000 of the acres that are undeveloped (see slide 53 of May Presentation) and GE has never even realized his lower range acreage price in any previous sales that I know of. Thus, I think it reasonable to conclude that half the acreage will bring less than $3000 an acre or somewhere shy of $150 million ($125m at $2,500 per acre). Based on the EURs cited in the presentations of 350 to 550, my guess is the 38,000 or so proved acres might be sold for around $7,000 an acre (round up to $275m). $400m max is my guess on Bakken proceeds and GE's past sales would suggest something lower.
Marvin: I agree with the move from the standpoint that the upcoming report will be nasty, and so I sold my last 10,000 shares a moment ago. That said, I anticipate buying back in next week after the anticipated dip as I think the PPS will gradually climb back over the next year. Consistent with my late post yesterday, I also have an order in to purchase at least one bull call spread in the Jan 2016 options. Hopefully, this order will be filled by Monday. Lex