refracking not really a very high cost proposition, relatively speaking anyway. The Bakkem wells cost in neighborhood of 10 million. The refraking job is about a million (based on what ECA has been paying to refrack Haynesville wells. ECA has been getting nice additional production (gas of course at Haynesville) and the ROI on those refracks is th ehighest ROI in the company right now.
These "morons" actually were the ones who DISCOVERED the Eagle Ford. Not to mention the Haynesville, where they were extremely early mover. They sold the old HK for huge gain (thank you Floyd) . Now they have found and re risked El Halcon, an extension of the Eagleford. And they are early mover in TMS which appears to be Far East eagle ford. So actually, they are the KINGS of the Eagle Ford.
Might break major resistance in the other direction - at least we are going to test the downside resistance afetr poking at the upside resistance a few times.
Fassman well is being completed by Platinum Packers, their first completion in TMS. The short lateral on the last well may not have been any one's fault, but Floyd brought in new fracking company going forward. Platinum worked with old HK in developing the eagle ford, so if TMS is eagle ford east, this should be good choice. Floyd wants to establish repeatable great results on whole series of TMS wells. New company may explain a little delay in completing the Fassman - that just started last week, hope we do have IP by Sept 3.
For sure the Fassman, maybe the Smith as well. He can put the results on the same slide they used at enercom where the peak production per 1000 feet was displayed.
I think that part of the problem was that there was virtually no growth from 2010 to 2013. Revenues went from 27 million to 33 million in that 4 year interval. And the run rate in Q1 2014 was no better. So it is nice to have a little revenue growth for Q2 and estimates for some growth for 2014 and 2015.
HK has had huge increase in production. If you expected more you have not been paying attention. FBIR is outrageously out performing. El Halcon is totally re risked and they are running 2-3 rigs just to get the acres held - development drilling later. And TMS has been receiving 10 per cent of capital. From recent ECA and GDP wells it looks like a go, and they have Apollo capital to jump start it. What do you want. In what area did you expect more?
Especially with the 4 MJ shops along historic Main Street. With those kind of gummy bears, it is hard to stay mad, or even focused.
When I first bought USEG the Moly mine was not an issue because the deal with TC was in place, they were carrying all the costs, and they had invested enough millions that my dd led to conclusion that they would not just walk away. I include half of their G and A in the Moly mine costs as my best guess as to how they deploy their energy and time. Otherwise it is very hard to imagine what they are all doing
By the way I like your screen name. riskreward is what it is all about and dd is the only way to assess that. But the best dd is open to opinions and worries across the spectrum. Let me promise you that one can worry about this company without being a closet environmentalist from CB trying to preserve the Red Lady at any cost.
I have a concentrated portfolio of 15 stocks. Every stock has its place. The turnaround/special situation basket can be a good source of wealth generation. Peter Lynch made huge gains in his Magellan fund from Chrysler, the first time it almost died. Anyway, I don't just add stocks. If I research something new and I decide to buy it, it has to be better than something I own, and I sell that one. Some stocks I have held forever. Example WFC which I bought as NOB before NOB bought out WFC. I haven't found a better large cap value pick to displace it (in 30 years) . I guess Iack conviction that I can't find a special situation better than this one. So I keep thinking about the company and what they could do to make a promising story work out. I just don't worry as much about some of the others. CDH.to is my other energy stock in this basket. No debt, three possible big upside wild cards. I am happy to sit with it a couple of years. I'm trying to get the same level of conviction and comfort in USEG. As I said, a new deal like the one they had with TC would get me there. Likely I should have bailed the day TC walked away. But I didn't. I don't quite know how to respond to the CB conspiracy theory. It is pretty bizarre if you have followed the board for any time. I'm also not an alien (as in not from earth).
I said that of all the companies I have bought in my turnaround/special situations basket, that 1/3 have been 5 baggers or more, 1/3 have gone bankrupt, 1/3 have moved with the market. I did not say this exact ratio applied to USEG. They are more of a special situation deep value play. Value is not recogmized in share price for several reasons. I think the risk of BK is low, but there is a big risk that the value will not be recognized gping forward. After all the did an offering at $5.25 in 2009. They haven't gone BK. But they haven't gone up either. That could continue in which case an investment here is not very satisfying relative to other choices.
I bought some more at $3.98 recently. But USEG is less than one percent of my portfolio. I think it deserves a place in the special situations/turnaround basket, because it is likely undervalued. But I would not consider it as a small cap growth or small cap value pick right now. If it does turn around and share price more accurately reflects value of assets, then i will have to compare to other opportunities in the small cap growth space. Right now Buda not fully recognized in share price, there is also reasonable chance that eagle ford drilling will work on the south texas acres. There would be addition by subtraction if they could exit the Moly mine, And there is small chance they could turn that asset into something very valuable. (I'm not holding my breath on that, and unlike some other opinions that have been expressed, I would not own USEG just for that reason.
So I would recommend USEG shares to someone in my position looking for a speculative high risk stock to invest a small number of dollars. Of the stocks I have owned in this basket over many years, a third are five baggers or more, a third go belly up, a third do okay and track the market plus minus 40%. If one of them goes belly up, no big deal, worth a shot. One thing they usually have in common is management I believe in. God knows I've tried. Reggie gave a nice presentation the other day. Maybe they can get some resolution on the Moly mine. A new JV like they had with TC (TC was responsible for all ongoing costs) and I would like them a LOT better.
Agree that Reggie was more effective presenter. Agree that oil production will finally grow. Agree that USEG likely undervalued. While the pendulum may be swing toward operating the mine, it is a SLOW pendulum (40 years to swing back and forth). And they can't simply operate it when they want to - they do not have the money to do that. And no one would lend it to them.
Everyone should listen to it - very nicely done. He mentioned selling the apartments. He did not mention the Moly mine. He said directly - "We are totally focused on oil and gas." Obviously if that is the case they should stop spending $3 a quarter on the mining project.