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Penn West Petroleum Ltd. Message Board

mrpev 2848 posts  |  Last Activity: Jul 6, 2015 2:15 PM Member since: Aug 15, 2005
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  • Reply to

    PWE has Dangerous Liquidity Ratios

    by heavy_air86 Jul 6, 2015 1:46 PM
    mrpev mrpev Jul 6, 2015 2:15 PM Flag

    It's a shame article. Completely wrong. The author didn't know the subject he was talking about.
    PWE doesn't and didn't have liquidity issues. With current debt levels ~$2.0bln after paying debt from recent asset sales they are at lower debts to production level than most producers.

    At $60 WTI unlike other US producers - at very low differentials and favorable Canadian dollar PWE is profitable in their sweet spot assets.

    As for liquidity they have $1.2bln bank credit with $200mln drawn at 3/31. They sold $415 mln assets and paid notes and bank that is close to 150mln balance at 6/30
    Also the 2nd quarter will generate free cash flow of $30-60 mln.
    Covenant issue has relieved for almost 2 more years and will completely disapear in 6 months.

    Liquidity? This qustion is for money burners. PWE had just one bad quarter in Q1 and since Q2 has started making money again. Don't look at paper loses, look at debt levels after each quarter. Debts were falling faster than asset sale proceeds. The only cash loss occured in Q1 2015 and much less than headlines indicated.
    PWE will be a huge winner in 6-24 month period.
    GLTAL
    mrpev
    PWE

    Sentiment: Strong Buy

  • Reply to

    Question to marketdata_bull

    by happyxu2005 Jun 19, 2015 2:15 PM
    mrpev mrpev Jun 19, 2015 4:56 PM Flag

    Unfortunately this is the typical question from bashers. The problem is.....the information is wrong in the question. PWE has lost money in one quarter only - Q1 2015 out of last 6 quarters. And that loss was for obvious reasons at oil prices at $48 on average.
    PWE will make decent money this quarter at current prices. GLTAL
    mrpev

  • mrpev mrpev Jun 15, 2015 11:05 PM Flag

    Not exactly. As I said it will vary Q-o-Q.
    Capex for 2015 is $625mm
    First quarter capex was $191mm
    Second quarter capex will be ~3X less due to breakup period in Canada (last year was $65mm)
    3rd and 4rd quarters should be ~$185mm per quarter

    Overall annual funds flow of $650 will even exceed capex, but quarterly funds flow will provide cash flow positve in the 2nd quarter, but slightly negative in the 3rd and 4rd quarters at C$70 light.
    WTI should rise higher to $70-75US in the 3rd and 4rd quarters in my opinion, so PWE should get positive cash flows in all quarters accept first this year.
    mrpev
    PWE

    Sentiment: Strong Buy

  • mrpev mrpev Jun 15, 2015 8:10 PM Flag

    $161mm in funds flow on avergae is about right, but will vary Q-o-Q. The 2nd quarter is different every year
    mrpev

  • Reply to

    question to mrpev or other longs

    by daicheng0722 Jun 15, 2015 12:11 AM
    mrpev mrpev Jun 15, 2015 8:03 PM Flag

    Today settled prices for July (spot prices will match tomorrow):
    All differentials from WTI:
    Edmonton light (~49K bpd): differential: -$0.449US
    WCS heavy (~12.5 bpd): Differential: -$7.469US

    July settled today:
    WTI at $59.52
    C$/$US = 0.8116

    Spot prices tomorrow will be:
    Edmonton light (~49K bpd): C$72.78
    WCS heavy (~12.5 bpd): C$64.13

    PWE will not receive those prices. Realized prices will be ~3-5% lower, but not bad at all.
    Hope this will help

    mrpev
    PWE

  • Reply to

    PWE is in the turnaround quarter now

    by mrpev Jun 11, 2015 10:56 AM
    mrpev mrpev Jun 11, 2015 11:53 PM Flag

    Hedges at $50WTI were horrible, but for 15K bpd in the second quarter, out of 49K bpd of light oil production and 12,5K bpd of heavy oil production.

    In fact PWE did not lock specific price, they bought swaps at $50 WTI. Specifically they will lose ~US$10 on every barrel (60-50) at current prices, less than that so far on average since April 1, but they are selling light oil at Edmonton prices and heavy crude at WCS prices.

    Historically Edmonton and WCS were trading at large discounts to WTI. Specifically in the 1st quarter the discounts were (from PWE Q1 report):
    For Edmonton - $6.80
    For WCS - $14.73

    In the 2nd quarter discounts dropped to the lowest in history, so far on average:
    For Edmonton ~$1.0
    For WCS ~ $8.5

    Also C$ in the 2nd quarter is still very low at ~0.8US on average.
    Such large drop in discounts, combined with significantly higher WTI prices while low C$ are helping PWE to realize substantially higher prices in the 2nd Quarter so far on average:

    For Edmonton ~C$66
    For WCS ~ C$56

    For comparison in the 1st quarter realized prices were:
    For light oil ~C$49.82
    For WCS ~ C$30.2

    As seen WPE will lose less than $10 per barrel on 15K production, but gain C$16 on 49K bpd and almost double on 12.5bpd

    PWE is benefiting from not only higher WTI prices, but also from very low differentials and CS. This is equivalent to ~$67-69 WTI instead of $60.

    Finally the 2nd quarter capex is expected to be 3 times smaller than in the 1st quarter due to break-up period in Canada. Last year it was $65mln. In 1st quarter it was $191mln.
    Bottom line: revenue and cash flow will be substantially higher, but capex 3 times lower in the 2nd quarter. As a result the net positive cash flow is expected even with terrible partial hedges.
    mrpev
    PWE

    Sentiment: Strong Buy

  • Reply to

    PWE is in the turnaround quarter now

    by mrpev Jun 11, 2015 10:56 AM
    mrpev mrpev Jun 11, 2015 7:43 PM Flag

    bintwo09,
    You may forgot to add "please" when asking any question, if you are interested in an answer
    mrpev

  • mrpev mrpev Jun 11, 2015 12:41 PM Flag

    btdarb,
    I concur all recent moves this year were done for survival.
    But I hate the word "survival". Many people and even professionals use it without a time frame. Yes this year moves were for survival to compensate for the big mistake of no hedging at huge netbacks.

    Next moves will not be for survival, but I suspect that people will continue using this term
    The 1st quarter was a disaster in the oil market for everyone, but it's temporarily. PWE 2nd quarter will bring nice positive surprises in my opinion. Investors are on the sidelines waiting for growth to resume.
    mrpev

  • I'm firmly believe the second quarter will mark substantial positive surprises when PWE reports the 2nd quarter results. Cash flow positive, slightly higher production than mid point of the guidance after adjusting for the recent royalty sale.
    Sequential improvements will be delivered in the following quarters. Oil prices will stay above $60 towards $65 and then $70. PWE will get a big jump later this year. Finally.
    mrpev
    PWE

    Sentiment: Strong Buy

  • mrpev mrpev Jun 9, 2015 2:07 PM Flag

    orthodoc88,
    Last $97 mln sale wast too small and insignificant. PWE didn't even name a buyer and assets sold. Some speculation was rumored PWE sold at pennies. I don't think Roberts would sell for below reasonable unless assets require a lot more capex injection. We'll know at the next ER. I'm not worried about it. We just need WTI to rise to $65 in June and $70 next quarter. And NG to rise to $3.0 in June and $3.5 next quarter. This is more important.
    mrpev

  • Reply to

    oil down

    by daicheng0722 Jun 5, 2015 12:33 PM
    mrpev mrpev Jun 5, 2015 2:48 PM Flag

    WTI is settled at $59.13, up $1.13
    OPEC uncertainty is removed
    mrpev

  • Reply to

    MRPEV: opinion on "fraklog" of 4731 wells

    by orthodoc88 Jun 3, 2015 10:50 AM
    mrpev mrpev Jun 3, 2015 5:21 PM Flag

    orthodoc,
    According to the best of breed - EOG presentation about a week ago EOG plans to have 285 uncompleted wells on December 31 2015 vs. 200 wells they had on January 1 2015. So they will add 85 more uncompleted wells.
    Pioneer will drill more, not sure about competition.
    I don't believe everyone will complete wells at these prices. Even at $65 some well will be completed, some will not. Completion costs up to 2/3rd of entire drilling and completion costs, so uncompleting wells require a lot of capital to finish the job, and price should be sufficient for IRR. I think companies will put new capital for completion very slowly, even more slower than drilling.

    I don't think uncompleted wells will put a cap on oil prices. Slim chance. I believe producers will put hedges for new incremental production first before starting completion work. So current futures represent completion in my opinion.

    OPEC-we'll see on Friday. The leaked info suggests OPEC will not cut. And I don't believe they will increase quotas either. I see 60-75% chance that OPEC will keep current quotas of 30mln bpd and quietly agree not increase current quotas to allow production to drop to quotas slowly from current 31.4mm bpd, if Russia agrees to do the same. That would correspond with US producers production decline.
    mrpev
    PWE

    Sentiment: Strong Buy

  • Reply to

    Cap ex for 3rd qtr

    by badmoon_ryzzin May 29, 2015 12:28 PM
    mrpev mrpev Jun 1, 2015 12:38 AM Flag

    Q2 capex should be in the $160-185mln range.
    mrpev

  • Reply to

    rig counts still falling

    by daicheng0722 May 29, 2015 1:36 PM
    mrpev mrpev May 29, 2015 11:29 PM Flag

    $60 is too low for everyone. Goldman Sachs think producers will start production increase, but they are not stupid at these shaky levels. They want prices to rise to $65 or higher....and stay there before they put more money into the ground. Inventories should drop to average levels first.
    mrpev

    Sentiment: Strong Buy

  • Reply to

    For investors in the oil business

    by pricepershare May 29, 2015 7:14 PM
    mrpev mrpev May 29, 2015 10:48 PM Flag

    PWE will have positive EPS in Q2
    mrpev

    Sentiment: Strong Buy

  • mrpev mrpev May 29, 2015 10:46 PM Flag

    They are not the same. Chevron is integrated company having many other businesses - refineries, pipelines, chemical plants etc, low leveraged to oil prices. It also hedged some production.
    PWE is independent E&P, highly leveraged to oil prices.
    When oil prices rise, PWE will act much better than chevron.
    mrpev

  • Reply to

    mrpev

    by daicheng0722 May 27, 2015 2:24 PM
    mrpev mrpev May 27, 2015 4:55 PM Flag

    1.268mm build vs 2mm draw expected
    Cushing: 72K draw vs up to 2mm draw expected

    WTI dropped a little, now recovering.
    The numbers are not firm, they are from models. Trader perception is more important in short term. A lot of negatives were built in crude during the last 3 weeks
    Tomorrow API report is more important.
    mrpev

  • Reply to

    mrpev

    by daicheng0722 May 27, 2015 2:24 PM
    mrpev mrpev May 27, 2015 3:36 PM Flag

    The official EIA report is due tomorrow due to the memorial holiday last Monday.
    The unofficial API report is due shortly
    mrpev

  • Reply to

    Oil and NG production growth differences

    by mrpev May 26, 2015 11:03 PM
    mrpev mrpev May 27, 2015 1:58 PM Flag

    orthodoc88,
    You likely meant Chanos and Einhorn. Both are famous short sellers, but the are different, and both are wrong IMO.
    Chanos attacked oil industry in general, saying there were no new discoveries for cheap oil and major integraters stocks will fall.
    Einhorn attacked shale producers, mostly the best of breed Pioneer and EOG saying that they never made a profit increasing production from more debt. Both have huge flaws in their arguments and just talked their books IMHO. Both are not energy, specifically oil experts.

    Einhorn used typical cash flow with present value model not counting that US shale producers have double production in just 5 years. Such high growth mode always requires more capex. Think Amazon which is not considered broken despite with almost no profits in 15 years. maintaining production and slow growth would not require extra debt. Einhorn also did no count the 50% drop in shale production costs in 4 years.

    I think I have covered NG, There are cost differences between oil and gas. Gas is profitable at $3, but oil is not until $65-70. There won't be oil flood at prices below costs. Need $100 or higher for potential flood.

    Saudi Arabia doesn't teach, they do their own business, but US/Canada businesses are more efficient despite higher costs. Saudi will kill other world producers, but not US's. They have alsready achieved their goal IMO.
    mrpev

PWE
0.67+0.03(+4.17%)Sep 2 4:04 PMEDT