when I got out around 2.70 a main reason was I turned bearish on long term nat gas prices on top of the usual debt stuff. Now this thing keeps tumbling despite the big move up in nat gas. I got lucky, if nat gas prices had shot up at the time I probably wouldn't have sold and held on longer. Sometimes better to be lucky.
Relational was expected to liquidate most if not all of their holding as the co-founder had throat cancer . As far as MHR I think that was more of a story a year ago, now I think the selling is based on fundamentals as Gary guessed wrong and moved to almost all nat gas which has collapsed to one new 52 week low after another, and his expectation he'd be making all that revenue to clean up the balance sheet and become profitable and eventually bought out at a big premium has unfortunately flared out so to say.
oooh I got out and I'm still occasionally posting. I must have a nefarious reason or a short manipulator. Stupid question like that is why Yahoo board often sucks. I owned it for a year or two I'm still going to follow it, may even read or write Yahoo posts. You might be ugly but still feel like looking the mirror. That's fine.
what I saw as a poor outlook for nat gas prices that MHR is now levered to, is why I got out when the stock wa hanging around the $2.70's. It has gotten worse since then. Again, I don't see this resolved with weather or modest changes in demand. Too many bigger companies have found "good rock", some that is even more productive of nat gas than when Gary declared to have found the best. Any significant rise in nat gas prices is likely to quickly bring along more shale gas on the market as a lot are just waiting for better prices to turn on the spigot. When you have an indebted stressed company like MHR where the CEO made a monumental decision to leave oil and get into nat gas, a decision I thought would turn out t be brilliant, but in fact is now looking disastrous, and nat gas just continues to fall then all these attempts at improving the balance sheet and making money just become more difficult.
A JV? OK, but the value of the underlying asset is deteriorating. I think GE may be backed into a corner and do a big offering just o buy time until things hopefully get better. Being stuck in an SEC investigation doesn't help him or anyone else either.
The blow-out problem was taken care of in Jan and everything was supposedly resolved in Q1. Unfortunately that was the least of their problems
As I noted I got out recently when we were around $2.70's. If I was still in, I'd still be scared of a Fri nigh surprise of an offering or other negative news. I don't have to fear that 8K coming out on that Fri night that would be about 95% likely to be negative.
Yes, I think the situation is bad which is why I finally bit the bullet and took a loss and got out in the $2.70's over the last two weeks. When I got in nat gas was around $4 and it looked like Gary's decision to get out of oil and bet the farm on high quality nat gas properties was prescient and timely. Instead it has turned into a disaster as nat gas is actually doing worse than oil lately, now at $2.57. yes, Gary has "good rock" but since he made his case other, bigger players have found good rock as well so there will be tons of supply waiting to go back on the market whenever the price goes up, that's a terrible long term situation for a company like MHR levered mainly to nat gas.
I don't see any mid-long term relief coming. yes utilities will continue to transition from coal to nat gas but it's not enough any more. Clearly export is no longer going to be the answer, we'll be stuck with 2 export terminals, LNG (Cheniere) and Dominion when they're done. And while they have commitments, a big surprise is the economics of export have actually deteriorated due to the way nat gas prices are set overseas.
For a company heavily indebted like MHR, a big offering is possibility just so in Gary's mind he can survive the current situation and hope for higher prices down the road.
The risk reward went from decent with a probably good premium buy-out at some point, to rather dismal in my mind which is why I got out. I think this can go much lower. If it goes up instead, it will be. without me. And please skip all the thumbs down, it's not useful and I don't care about it.
Fundamentals continue to be poor
If someone wants reality and not little meaningless anecdotes about places, just Google graph of global temperature, click surface temperature analysis, data and images-nasa, and look at graphs on right
Your global cooling notion is absurd. I did study the scientific details on climate change and man-made global warming is real and at an alarming point. It doesn't matter what 's happening in some local area or if there's an el nino or if you're an idiot Senator who brings a snowball into the Senate to make a point. Globally we continue to have the hottest years ever recorded. Heavy snow is in line with global warming predictions. If oceans are warmer the atmosphere picks up more moisture which yes, often comes down as snow.
The changeover from coal to natural gas in power plants has been happening and continues. I thought it would be a significant factor in supporting nat gas prices along with other factors, but it's clear to me those notions turned out wrong. The nat gas supply from shale is overwhelming everything and much of it is sitting idle just waiting for higher prices when the added supply will hit and keep prices relatively low.
Any possible catalysts are being diminished as nat gas continues to tumble, now $251, another multi-year low. Any JV for some property will likely get less if it still happens at all. As to Eureka it's less clear but certainly most MLPs for oil are getting somewhat hit,even if they are mostly toll roads.
I think the chances of an offering even down here are increased under current circumstances. Gary may just decide to bite the bullet and raise cash and wait for better times even though an offering will further kill the stock including his.
The reason I got out when we were in the $2.70s is I really think it's different this time. While sure, there will be cyclicality and variable weather, the difference this time is others have also found large amounts of good rock since Gary 's looked the best. Now others have more of what seems like equally productive areas and whenever the price pops it will be met by supply. That's a sea change.
Also if oil goes back up it exacerbates the nat gas situation since a chunk of the nat gas supply is a
byproduct of producing oil, more drilling for oil, even more nat gas supply. The fundamentals for nat gas companies has gotten awful. And it looks long term this time. For nat gas the shale revolution has become too much of a good thing.
As I noted in my post the other day (which got 6 thumbs downs so I guess only positive posts are acceptable),about why I was getting out, I think an offering is very possible. This is a nat gas stock now. Gary made the bet that nat gas was the right place instead of oil. It made good sense to me and nat gas was holding up for a while when oil started to tank, but now it's turned hideously wrong as nat gas has touched a new 52 week low at an incredible poor $2.54.
Gary talked about how he had "good rock", the problem now is since he said that a ton of good rock has been found by others. If nat gas does move up a bunch, there will be tons of supply ready to swoop in. We're unlikely to see any 3rd export terminal besides LNG and Dominion and because of the way pricing is based overseas,, demand for nat gas from the US has softened as it is.
I got out the last couple of weeks when we were $2.70 I don't short stocks but I think the until something dramatically changes down the road, this stock can go far lower and an offering may be needed just for Gary to buy a lot of time until hopefully nat gas prices come up. I'm bearish now because nat gas looks like it's going to be relatively low, perhaps for years. The SEC stuff just adds distraction to management and adds
insult to injury..
Still being held up by mild oil rally while nat gas continues to languishes around $2.70 now. SEC investigation may just go over old stuff but it's got to be a big distraction at the least when fundamentals are already under stress.
Now that they renewed a huge shelf, Gary could use the SEC investigation as a reason to do an actual offering down here. The main thing is when I got into the stock, nat gas was around $4 or above and based on the the "good rock" everyone's finding beside MHR, it just looks like nat gas may be weak long term, and a third export terminal after LNG or Dominion looks unlikely so I don't see export soaking up supply.
Also nat gas vehicles etc. obviously hasn't played out as hoped. Sure, Eureka may be worth a lot and they'll get a partner for some other financial relief, but I just don't see positive fundamentals anymore as I did when I originally invested.
Yes, I think Eureka can bring in a lot of money and the whole company will eventually be taken over at a lot higher price. But I was adding a bunch when I thought it was improperly being hit hard due to oil, while nat gas was holding up OK. Now nat gas is hanging around $2.60 and it looks like supply is going to keep going up or will shoot up as soon as the price goes up.
Meanwhile the stock is way up off its lows because oil has bounced which fundamentally doesn't help them that much. So I'm not as excited about the long term of nat gas prices and this MHR jump into the $2.70'smakes me want to lighten up which I've been doing a lot of. If I get burnt and unnecessarily lock in some losses, so be it. At least some of my average down purchases were were on weakness well below the current price.
Nat gas price fundamentals just seem to have deteriorated a lot and I don't see some big rescuer. Others are piling in and they all seem to have found "good rock" as Gary says he has.
I guess could depend on CC in AM I didn't see guidance in the PR