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
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
HT: While I certainly agree with your overall sentiments, selling the Bakken is a mixed-bag from the perspective of cash flow, which MHR needs so desperately. Remember that our 5000 a day of Bakken generates a royalty-adjusted $400k or so a day in revenue, which is 100,000 mcf a day of dry Utica gas on a sustained basis, or around 60,000 mcf a day with MHRs level of liquids. Yes selling Bakken creates a large liquidity event and helps to focus the business, but revenues will fall dramatically once sold without a lot of new -- and sustained -- production. What MHR really needs is a slew of additional wells on the pipeline to jack up future EBITDA projections so they can monetize the pipeline at a high Ebitda multiple..... Now if THAT happens the shorts will really be scrambling. Just my two cents. Lex
I was fortunate enough to make some substantial gains (for me anyway) in the January 2014 MHR options when I doubled down on some option spreads when the stock price dipped last year. IMO, the current price dip has resulted in the January 2016 option prices finally becoming a bit more reasonable and it may be time to "dip into the LEAP option pool again"
For those of you who like option trading, realize the mid points of the $5 and $10 strike prices as of the end of today are $2 and $.90 allowing one to buy a $5 to $10 bull call spread for $1.10 (best case) and likely around $1.20. Around $12,000 gets you a 100 contract spread with a max value of $50,000. Possible results to consider? -- You lose your money if the PPS is below $5 18 months from now. Break even is around $6.20 or just a bit above today's price. AT $7.40 you double your money. At $8.60 you triple your money. And if MHR breaks out of its funk and gets above $10 in January -- nearly 18 months from now -- the spread maxes out at $5 vs an investment of $1.20 for slightly more than a 4 bagger. MOREOVER, it you hold the trade until at least this time next year, you get capital gains tax treatment to boot.
Just a trade idea for the other option players on the board. 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....
As the PPS of MHR gets hammered day in and day out, and weeks and weeks of delay follow each of GE's announcements regarding developments that should have occurred months ago per his explicit representations, it is hard to find anything exciting about MHR. But I found something, and that is Slide 4 on Antero's new presentation that came out today.
Look at the counties where Antero thinks the Utica Core and Fairway is, along with the counties where Antero thinks the Marcellus Core and Fairway is located, and it is easy to conclude that at least Antero thinks GE has acquired some very fine acreage positions in and around both plays core acreage. Now.... If MHR could only produce what it apparently owns.
I am getting so very, very, very tired of GE and his delays; HOWEVER, slides like this keep me hoping that tomorrow will be a better day. Lex
Perhaps the best part of the announcement today is GE has a powerful partner for purposes of launching the antipicated MLP in 2015. Somebody to hold him accountable and force his hand and someone who, with Relational, will be pushing hard for progress on all valuation fronts. If GE could only get the SW wells on line and announce other significant well test results...... Today's announcement certainly makes the 2016 leap options more attractive IMO. GLTALongs.
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
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
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
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....
Welbie, with all due respect, you are simply full of it. The all stock merger may well prove to be a good deal for KOG, but you dont have a bunch of experience with all stock mergers to know one way or another. For you, of all people, to NOT question whether KOG got a good deal is simply BS. Kog did not and yolu know that more than just about anyone else on this board, so dont call out the post-offer questioners/posters like that above as if they were/sre stupid, just because you have figured out the deal was not necessarily bad and, notwithstanding the fact that KOG did not get a giant premium, the PPs may nevertheless continue to go up and that is good for you.
But the offer wasnt good, and you know that, and you surely expected something like a 30
% premium because YOU have more pride in KOG and Peterson than anyone else.. But then you adopt an "i'm better than thou" approach to the falsely assumed position that you somehow "knowi it all" with respect to all stock mergers and otherwise understood this deal from the get go, and act like you knew it was a fantastic deal for loyal longs from the second it was annolunce --- and, well, that attitude you assumed in the foregoing message you authored is simply bullshix.
You may have invested early in KOG, but you are SO full of shix because of it, anyone with common sense just considers your notes as insignificant. So, write all your notes with all your +++++ separations, and call everyone names as you regularly do, and act like you know it all, but from this point on..... everyone will know, based on this post of yours, that you TRULY ARE full of it....
You are an idiot.
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
Although this apparently does not impact MHR directly, Zeits has a new Seeking Alpha article out that discusses the monster results of Shell's deep Utica discovery in PA. For those of you paying attention to surrounding area developments, it is an interesting read. Google "deep Utica discovery" if you cannot otherwise find it. Just out this morning. Lex
Whiteoak: I am a long time MHR holder, but pared my holdings way down since the beginning of this year based largely on GE consistently misrepresenting events, or at least the timing of them, coupled with related concerns involving cash flow. There is no disputing your quoted figures re past operations being very unprofitable, yet that in large part is attributable to significant expansion of acreage coupled with upfront pipeline development costs coupled with depletion and depreciation expenses. When they bring the next few pads on line, production should ramp up quickly and the cash flow situation should improve. But you are right, MHR will need to divest of more assets and wont be profitable for another year or so.
BUT, this IS an asset play, and it IS a grow the company and sell it play, and your analysis/comments don't focus on that. You choose to comment on the 800 mboe figure compared to 78m, when everyone knows both figures are BS given the company's current situation. The Aussie deal aside, GE has put together a tremendous acreage position that he is just starting to drill -- compare Antero and other more-developed companies' investor presentations regarding where the core of the Utica wet gas is, and the core of Utica dry gas, and the core of Marcellus wet gas, and -- lo and behold -- you will find MHR acreage that, coupled with the pipeline, is evidence why the current PPS is too low and ready to rebound. Yes, MHR has failed to deliver timely, but the time for real improvement is coming soon (particularly from this low price) and IMO that is one of the reasons Relational came in with their investment.
In light of the foregoing, I submit you should rethink your position. Just my two cents. I know I have as I recently started buing shares again and I am long 300 Jan 2016 option contracts. Lex
I love it. Three thumbs down on a post using GE's own numbers to prove a point on value? Does that mean the other posters don't like anyone relying on GE's representations? I cannot tell since no one offers a post indicating I am wrong about anything, or miscalculated any number.
It certainly appears that if you make any point that is not a straight forward rah rah statement, you get dinged by the more "perceptive" folk like Dantucker. whose "analysis" is that MHR "has a bright future." What a deep thinker he is..... Reasoned analysis from an owner of 20,000 shares? That post gets 3 thumbs down. A subsequent post slamming those offering reasoned analysis while calling them names? 4 thumbs up. Delicious!
I would bet $1000 that the three thumbs down posters on my note above (a) have never taken the time to perform any of these calculations,(b) had no idea what GE's average valuations for his own Utica and Marcellus acreage are, and/or (c) calculated what premium, if any, an acquirer would justifiably pay for MHR's shares. They just want unadulterated pumping. Go Dantucker Go!
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
Marvin: The problem is, I am not sure there is a tremendous amount of upside to be acquired right now pending some major Utica development news. The company has $1.15b of debt and preferred stock and I think selling the pipeline for $600m and Williston for $400m doesn't quite cover the debt. Taking GE's own numbers from his NAV slide, the average of HIS values for Marcellus and Utica is $1.815B (and, so far, he has never sold acreage for close to the average value). But assume he gets his own stated average and knock down .115b for non covered debt and preferred and HIS value is $1.7B vs 191m shares or about $8.90 a share. Certainly higher than current PPS, but not a terribly exciting acquisition target either as an acquirer may pay a current acquisition premium, but only get NAV for doing so. That is why GE really, really, really needs some strong Utica production to come on line -- to force the value of MHRs acreage above the 9,000 per acre value built into the foregoing analysis from GE. Lex
FWIW, I sold another 5k shares this morning and reinvested the money in TPLM. Now down to 20k shares in MHR and no option contracts. Hopefully 2015 will be our/MHR's year....
Not that gutsy because I invested in spreads. I have a 150 contract spread between 5 and 10, and another 150 contract spread between 7 and 10 with average cost of 1.28 so my break even is 6.28 and I started out in the money. I lose money if it trades below $6.28 in Jan 2016; I make about $11k if it trades at 7: and I make $30k per dollar from $7 up to $10 seventeen months from now. $10 or higher and I nearly quadruple my investment. Selling the $10s greatly reduces my risk and cost, which is why I rarely buy calls by themselves. Absent a buyout, I don't see the PPS going ballistic in the next 17 months, but I do think it goes up from here which works for me as I double my investment at $7.60 or so, rather than at $12.60 for folks buying shares now. GL to all the longs. 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.