Some of the disgruntled shareholders have actually increased their position during the dark days. Maybe they have played a role in keep pressure on the company to make some changes and focus a bit.
1. Are the jet , the hanger, and the pilot gone?
2. Did they finally sell the apartments?
3. Did they make a decision to focus on oil and gas and try to exit the Moly mine with a sale or a land swap or a JV that monetizes the asset? Have they pushed that agenda more aggressively?
I don't want to list all the mistakes, but they do seem to be making fewer of them recently. Maybe the micro shareholder activists have had a small positive role? The Buda find was a stoke of luck and largely due to Dan Hughes discovery on adjacent land. But luck counts too. Sometimes it is better than skill.
Costs of the moly mine always a little unclear. Water treatment costar were reduced a little and should be flat with last quarter. But there may be some costs relative to moving various processes forward.
They have a 1 T MCF bubble of gas sitting in a big conventional reservoir with 5 straws ( wells) stuck into it, each expected to draw 50-60 MMCF/day. I think they have the geology right. I think the wells are okay (they redrilled a couple of them). I hope the facility and the pipelines will work as they are designed. Producing discoveries like this one has been done many times before. Thi one just seems cursed.
That requires stable production and turning over the platform to the operating company that will run it under agreed upon lease terms for 9 years with annual renewals after that dependign on production levels. As of Oct 1 stable production had still not been achieved. (they are aiming at 250 to 300 MMCF/day.
The last news update was on Oct 1, when ECA said that:
"Two crews of about 40 people each are working around the clock to bring Deep Panuke on stream."
To me that project has become a symbol of ECA turning the page and moving forward. I think it will mark the beginning of a long slow upturn in share price, replacing the long brutal slide we have been experiencing. (It won't be the cause of the upturn, that will depend on the lew leadership and other factors, but it will co-incide temporally with that change in direction. They might even sell it off to reduce some debt, once it is a stable producing asset with all production already pre-sold.
Hope so. They do need to report results for Buda #2 well soon. If that is a failed well, then USEG won't bounce up like a coiled spring. It will sag like a pricked balloon. Maybe they are waiting to report well results for Buda #2 and Buda # 3 together - like "#2 wasn't so hot, but #3 is good". But that isn't right, as the results of Buda #2 are clearly material and should be reported when they have them. (they also promised this).
I hope not. Everyone would have to agree that the second Buda well is highly material. I think they spud Buda 3 on September 17. So that one should really be through drilling as well. They have one rig so they couldn't have spud Buda 3 if Buda 2 wasn't complete. Again, good companies have reporting that is predictable, timely, and transparent. USEG is generally 0 for 3 on those metrics. Hard to predict when they will announce something. Already info on Buda 2 is not timely. Certainly they are rarely transparent. Like how did we find out about need for sidetrack on Buda 2 which doubled drilling time?
At least they do have a goal to continue the string of annual increases. And this year won't be as severe a test of that resolve as the last couple of years.
Glad you are back. I have been adding more with similar thesis. The can run with the Buda for at least 18-24 months. (I will be a lot more certain of that when results on Buda 2 and Buda 3 are available). Then soemtime in that 24 month growth period, they can find a soloution or a least a credible plan to monetizing the Moly mine. By the way, what is your take on the value of the mnoney mine and whetehr or not USEG can capture any of that value, by a JV, and outright land sale, or a land swap?
I did not bring up the apartments. A defender of the faith brought it up as an example of a horse the larsons' rode as well as possible. I should have just groaned internally. I want the company to do well. I am long, have never been short, have added more when it was at the low. I just don't think it is wrong to put pressure on them to act like they really have a fiduciary responsibility to the shareholders (the owners) to maximize shareholder value. They do. They would still have a jet plane, a pilot, and apartment complex and would feel no pressure to move forward an find an exit from the moly mine - if there had not been some lack of appreciation for share price in 1's based in part on management decisions. Let all hope for a smooth ride on the buda train for next 24 months and some progress on moly mine during that interval. That possibility is why I own the shares.
Riding the horse as far as they could? Re: the apartments? They took investor money raised in a public offering to invest in oil and gas enterprise, parked 24 million of it in an apartment complex, and rode it to 14.5 million. Surely you can't be using that item to say that management has been doing as well as they could.
I agree there won't be significant acquisitions. I also believe they have several important assets they can eventually monetize. Those who followed Petrohawk know how important HK oil services was; it allowed them to build the infrastructure so they could quickly ramp sales at Eagleford and at Haynesville. Then once production reached a certain level, they SOLD the devloped infrastructure assets to midstream companies at very good prices. They can and likely will do they same thing here. Some of the capital they are spendign and the debt they are accruing will be cancelled by selling midstream assets at the right time. They also likely have some non-core areas that they will unload as they focus in on the highest return areas.
I think they paid the 1/2 cent a quarter increases just to keep the streak of annual increases alive during the financial crisis and subsequent Great Recession. I would look to a penny a quarter increase this year, maybe even 2 cents a quarter next year if they continue to grow revenues and profits.
KM ranch 1 and 2 and Beeler 1H. There is no way CXPO would have drilled a 4th eagleford well after the sub-par results on those three wells. Luckily they didn'y have to. They stumbled onto the Buda and drilled ONE good well. Maybe the Beeler 3H (Buda 2) is pordicucing nicely as well. We should know soon. And the Beeler 4H (Buda 3) is drilling. It will be good if the start knocking ut a nice Buda well every three weeks and keep that going for a year. That brings growth and some time to work on other things (like resolving the Moly mine issue).
Put half into LTS and the other half into some GE and some ECA. Actually upped the income quite a bit. Wright has been very strong about continuing the LTS dividend but we'll see. ECA is a beaten down turnaround at this moment but has huge assets and new leadership. May or may not cut their 20 cent dividend. And hard not to like GE here - they will boost the dividend at least 3 cents in Dec. I have a lot of GE but I guess not enough since I had to add more.
May well be. As I said they have drilled one economic well with that money. In 21 months, as you say. (Buda 1). I am really hoping that Buda 2 is a nice well and that buda 3 is a nice one and on the right timeline (3-4 weeks and not 6 weeks plus). I would like a nice string of economic buda wells as much as anyone. I guarantee you that it would not have been a sweet deal (to sell the Zavanna and Statoil participations) if they hadn't stumbled on the Buda (or more accurately watched Dan Hughes find it).
The Bakken cash went for lots of things. A failed well with Cirque in California and three failed Eagleford wells with Crimson ate up a lot of it. (They may be the only company with three consecutive non-economic eagleford wells). They participated in 7 unsuccessful woodbine wells with another JV partner.
But thankfully Dan Mueller drilled some nice Buda wells right on their property line an they have drilled ONE economic Buda well. They have another buda well that had technical trouble, is likely finished by now, without known results. And they have spud a third Buda well.
So anyway it may all work out with a string of nice Buda wells, but to date they gave up a lot of Bakken participation for one buda well.