When you look at a chart for various indications of the type commented on here, what period of time are you typically looking at? 3 months? 6 mo or 1 yr?
I am a big proponent of using relatively conservative bull call spreads to enhance your overall returns, so I am constantly looking at various spreads and their related option premiums and, I must say, I have not seen such optimistic option premiums in a long time. Realize the January 2016 LEAP options are now being sold (great for capturing LTCG tax treatment vs the shorter term plays) and the premiums are simply sky high, which I certainly hope is an accurate reflection of INVN's potential. Right now, the $30 strike is selling for more than $3.50, so buyers of those calls need the PPS go up over $33.50 in the next 18 months to make a penny of return. I think I am as optimistic as the next guy, but that is an aggressive bet.
The flip side of the high premium story is the benefit associated with selling the premiums. For those feeling strongly that INVN will be moving steadily upward and are looking for a trade to boost their returns, bull call spreads might be worthy of consideration since you reduce risk by selling the higher leg. For example, I purchased another INVN spread yesterday between the $22 and $30 strike prices (Jan 2016) for $2.60 -- a trade that will triple my money if INVN hits $30 in 18 more months ($8 / $2.60) and produce a nice little bump to my overall return if it makes. A 50 contract spread cost $13,200 and maxes out at $40,000 if the stock goes up just 7 points over the next 18 months. Just an alternative idea for those looking to add to their LT share holdings. GLTALs, Lex
I read DiLallo's regurgitation of the Bloomberg piece and I too tried to post a comment, but to no avail. I cant believe that Bloomberg and MF question the debt level of MHR without making specific mention of the fact that if MHR simply monetizes the pipeline, $600m to $700m of the debt can be paid off in one stroke. THAT is the most important factor in explaining why the current debt level is not too high considering ebitda levels. For the so-called "pros" not to comment on this giant factor shows how little credibility they have. At least DiLallo referenced the presentation slides with asset values that contains a one line reference to the pipeline....
The bottom line (IMO) is that KOG can become a Utica-Marcellus pure-play company with NO debt whenever it wants by selling the pipeline and Williston assets. GLTALs Lex
Man you like to argue. I told you I verified my representation before I made it. Sure, you can calculate a short interest percentage in reference to the float also, but the Definition is against outstanding shares. Here is the quote: Tell me I am wrong again and you are a better source of information than Investopedia.
Investopedia explains 'Short Interest'
Definition of 'Short Interest':
Short interest can be expressed as a percentage by dividing the number of shares sold short by the total number of outstanding shares.
0 for 4 now, and forgive me for pointing out the obvious, but you began this idiotic back and forth with "shorting moves shares to the sideline" -- since then you want to argue about everything but your nonsensical premise that I took issue with. But again, tell you YOU are the source of all correct information and Investopedia has its head up its aqq. You are a work of art, or I guess drama queen fits a bit better, eh?
I am done spending time with you as your one of those posters who considers himself always right no matter how many inaccurate things they say. I misspoke once, admitted it, and moved on. Anyone reading this thread can figure out who is right. Later....
Look it up on investopedia numbnut. I verified it before I wrote you back. 0 for 3 now....
Need to admit my mistatement using the word float reacting so quickly to your numbnut statement. Should have said they add to the sharecount in play. But you? Remove shares to the sidelines? And YOUR comment on float is wrong as well as short interest is calculated on outstanding shares, not float. So now your 0 for 2 and back to McFly status.
Spdrama: Shorts "simply remove shares to the sidelines" eh? You go on and on as if you understand shorts, and then offer this remark? Incredible.... Shorts do just the opposite, they add shares to the float. Hello? McFly??? Is there anything in there???
Slab: I agree with your view that GE doesn't sell the Bakken anytime soon, if at all. He is a financial guy and is OK with debt as a tool for growth. Borrow at 10% and drill wells with 65% to 85% IRRs all day long. MHR is so far away from being cash flow positive it is almost a joke; HOWEVER, with the Bakken and pipeline available for sale to cover debt, MHR share price remains solid as everyone awaits a prove up of the south Utica acreage. He doesn't have to sell it right now as he has other sources of funds with his new partner and other asset sales, and it would hurt his CF and borrowing base, so it doesn't make sense to sell. But as long as the market thinks he might sell, and reduce some of the debt, life is good.
At some point though, he has to deliver on production. We are half way through 2014 and Farley is still not hooked up and the Mills Wetzel wells aren't hooked up and all that was supposed to happen LAST YEAR. I was thinking 2014 was going to be our year, Hate to say it, but I think we are now looking at 2015.... good luck on your travels....
I think the answer to your question is because this information is accurate. The annual income statement shows the company made $6.119m of net income for about 88 million shares.
By the way, my guess is GE doesn't sell the Bakken until, at minimum, the Farley pad is hooked up because he needs some "full value cash flow" associated with at least 4500 mboepd of his current 20,000 boepd production being actual oil revenue. That is, where MHR is getting $90+ dollars per barrel vs $5.00/mcf x 6 = $30 of "equivalent value cash flow." Selling off that cash glow and the related reserves would hinder MHR further as this point in its development.
Realize the CF from the oil production MHR has now, is approx. the same as the CF MHR will have at the end of the year from non-Bakken production IF IF IF Mhr gets to the 32,500 exit rate. 4500 bopd oil x $90 x 365 days = $148m. 32,500 less the 4500 bakken = 28,000 Boepd. Assume 25% liquids production and you have 7000 x $40x 365 = $102m and 21000 x 5 x 365 = $38m for total of $140m non-bakken (and my calcs assume all 4500 a day from Bakken is oil with no gas) Selling he Bakken -- in my opinion -- is NOT what GE wants or can afford to do until he has the Marcellus and Utica really flowing well.
Middle of next year maybe???? Just my two cents with reasoned calculations. Lex
Several posters have wondered what the Bakken acreage is worth and I have looked at that issue a few times and offered by "reasoned guesses."
Looking at the various presentations (current and past) where GE values acreage in various value ranges and then regularly gets less than his projected range, I think the absolute best case price MHR could get for selling the Bakken properties would $450m and my gut tells me it would be more like $375-$400m based on (a) GE's track record, and (b) MHR's proved developed Bakken acreage NOT being in the core of the play (MHR avg 450 EUR well range vs 650-950 in the core).
I estimate the best case scenario as follows: 8,500 noncore acres at 2500 an acre is $21m; 50,000 undeveloped at 2500 an acre is $125m; and 38,000 developed at 8000 an acre best case = $304m. Sum of 21 + 125 + 304 = $450m best case. If the proved developed acreage only gets $6000 an acre, you are looking at $375m.
Since MHR is low on cash, these JVs are an excellent way to increase production and cash flow at a slightly better expense ratio. Sounds like the first pad wont be that big for MHR with only a 14% interest, but the second pad with 87% should be great for us and, it is the second pad where we have overlapping Utica and Marcellus acreage. Perhaps the biggest factor for me, but one not in the press release, is whose rig is doing the drilling. I trust it is Edgemarc's since the first pad being drilled has Edgemarc with such a high interest. If accurate, this is great as it adds another rig to the MHR production equation. Lex
Marvin: Not challenging overall premise of your note, but hard to consider MHR a "baby oil" anymore given giant shift back to gas. I think this is one of the reasons MHR's share price has not be ramping up quite like the KOGs and TPLMs. While GE likes to quote flow rates in terms of mboe, MHR is getting about one-fourth to one-third of the true oil-based revenues even with the 4500+ bopd it is producing from the Bakken and all the NGLs it is producing in the Marcellus. Just a thought....
If so, could you kindly provide any insights offered? Thank you. Lex
Swag: Owning shale assets -- your reference this time around -- is quite different than proclaiming that the company has enough Wolfcamp acreage to pay off all its debt. Just going by what management said???? I think not.