Miss Midstream is worth 500 Mill plus. Century Plant is a liability at present, but OXY needs the C02 bad. C02 in short supply in the US and in decline. Production in the WTO worth at least 350 Mill. And SD has all of the seismic and quite a bit of acreage in the WTO as well.
Maybe we see a deal go down in the WTO soon, OXY might pay a premium to get it at present. In a 5.50 to 6.00 NG environment there will be lots of suitors and we are heading in that direction.
Penalties are 30 Mill and rising on the Century Plant obligations. Shedding this liability would do wonders for SP, especially in conjunction with paying off additional debt.
I've had Cleint9 on ignore for a long time. Elvis tracked her down somehow and found out that she was a fat Hippie chick leftover in her 60's. Elvis you OK, know you are in Tornado alley and haven't heard from you for a while?
If enough people report abuse, Yahoo will remove her. Got sick of this beatch along time ago. Report Abuse and Ignore - that should solve the problem.
InDebt, it looks like a bomb zone on google. The best way to verify completions is on the Texas RRC website. I pulled up the Pinon and it appears the vast majority of wells are hooked up and flowing. Decline curve appears to be substantially better in the Pinon than in the shale plays. TRRC website is tougher to navigate than in the past, specifically on tracking well production. It used to be that you could locate a field click on each of the wells and pop up production. Now you have to sign in to view 1 well at a time - very time consuming. Nonetheless, it looks to me like the vast majority of the Pinon and SD's WTO wells are in production - very little outside the Pinon, but that east side looks to be really good, PUD only at this point but at least 3 fields with somewhere close to 1.5tcf in each of the fields.
Trap plays, and there are likely quite a few more. WTO likely has 20 to 30tcf and SD has all of the seismic. Pinon has at least 3tcf left in it alone.
Thanks for letting me know cemadh. Not sure why Yahoo dinged my last posts, but its not the first time it's happened to me or many others. My thoughts and prayers for all affected by the Tornadoes.
InDebt, I've tried 3 times previously to reply to your post and was unable to do so. Hopefully this one goes thru.
My understanding is that vast majority of wells in the Pinon and WTO are hooked up. I've spoken with Kevin White in the past about this and he assured me that SD was not choking back wells or shutting them in at the time. No wells have been drilled in the WTO since I last spoke with him.
There have been a few discovery wells drilled outside of the Pinon and the ones on the eastern side appear to have been the best. There were some discovery wells drilled to the southern side, and SD did find good structure but missed the sweet spot and stated that it was down dip and not commercial.
Not sure why my posts aren't coming up in response to your questions. Maybe you tried to put Cleint9 on ignore and triggered me instead, or maybe it's just more Yahoo problems. If others can read this post let me know, and maybe we can figure this out.
I'm a long term type investor. Play the trends, very patient, and try not to fall in love with one particular stock. NG is definitely in a Bullish trend and companies that have low production costs should do well in a recovering NG environment. Watch for at least 3 consecutive months of NG production decline - published statistics lag quite a bit so it may be winter or later before we have confirmation, but its coming.
Exactly correct, UPL is one of the purest NG plays out there. I'm a NG Bull and like them along with RRC, SWN, ECA, and SD. The demand side drivers are in place for a long term recovery in NG pricing, and supply appears to have peaked or is very close to it. No increases in CAPEX for Dry NG until 5 plus. It's going to happen just a question of when and the futures market will have to solidly support in forward pricing hedges.
If you have a little time you might want to listen or read the transcript from UPL's CC. XOM NG production now down 9% YOY. Watford thinks NG production is already in decline with demand side drivers increasing. UPL still is cheap and they are being very disciplined about managing their finances.
SD has not and likely will never file for a LNG export permit. They will however benefit from increasing demand for NG leading in theory to higher prices.
The industry is largely divided into 3 segments: Upstream (Drillers & Producers), Midstream (Pipeline & Gathering) and Downstream (Refining and LNG Processing). SD is a driller/producer with some midstream assets, but no plans for export terminals - they cost billions to build.
Cheniere Energy Stock Symbol LNG is the heavy favorite on LNG exports. I bought it at 8 and sold at 12 - big mistake. It's trading now close to 30 and some think its heading to 60.
I don't know what you are talking about on the railroads moving LNG - there is talk that locomotives will convert from Diesel to LNG. Cryogenic processing is required for LNG. It's going to happen in areas that are ports, primarily retrofitting older port facilities that were originally configured for LNG imports to dual purpose - available to both import and export.
Excellent news if its not FTA. Supply side is teetering demand side moving up. LNG out of Sabine Pass comes into play in 2015 - the rest are later - around 20bcfd in permits waiting approval. Highly unlikely that all get approved. But we now are at another 4.0bcfd that is approved. We've seen NG move radically in the past, it will do so again. A BTU is a BTU parity with oil at 6 to 1 is $15 with 90 Oil.
No way NG doesn't move higher heading out 24 to 36 months. SD positioned well for the move.
That's good news. Along with Cheniere's Sabine Pass plant, another 4.0 bcfd of demand. I couldn't find a link to the Freeport approval. Hopefully this approval is for countries that aren't in FTA.
Liquification and transport around 4.00 - 4.50 to Europe, in the 5.50 area to Asian markets. NG at $10 plus in Europe and $15 plus in Asia. Contracts are based on Henry Hub, though a new market Hub may develop in the Marcellus. US Natural Gas will move into parity with International prices less processing and transport costs. We will see 5.50 to 6.00, maybe more.
Payback, I rarely hit the hard stuff. But cheers to you if that's your cup of "Texas Tea". I ran some numbers on the WTO a while back and concluded that it was not economical until NG prices hit 5.50 - the penalty clauses may change this a bit but its unlikely that SD will ramp up production in the Piñon anytime soon. There are at least 3 fields outside of the Piñon that are much higher Methane content. Just PUD's at present, but SD or Riata drilled wells them - eastern side of WTO and it looks to be really good.
I'd sure like to see SD strike a deal with OXY for just the Piñon and keep the rest of the WTO. The 30 million penalties are a huge drag on SP and likely to increase. Give me some insight on what is going on with OXY and why they would not be interested in picking up the Pinon. Seems to me if NG gets up into the 5.50 area it would be a slam dunk deal. OXY gets 50,000 boed from CO2 injections when the plant is flowing in the 550mmcfd area. Enlighten the board on what is going on behind the scenes.
NG Rig Count peaked at 1606 in Sept of 2008. That led to tremendous production build. I figure a rig count in the 500 area will be necessary to maintain current production figures once the backlogs are worked thru. The 350 current Rig Count isn't going to do it. Demand side is going to come into play as Coal Plants can switch back and forth, but lots of Coal Plants getting retired because of EPA regulations.
We are going to see much higher NG prices in the next couple of years.
NG has moved radically higher in the past. And it's setting up for a good spike - probably by this winter and certainly within 18 to 24 months.
Long SD, RRC, UPL,SWN and ECA. ALways a good idea to diversify, I like companies that have the ability to produce in a low priced NG environment and believe they will be first movers in a recovering NG market. The WTO will come back into play in a big way if I'm right on my hypotheses
I've read most of the reports but concentrate on NG. EIA does not have a good long term forecast record. The 7200 wells that need to be drilled are for Dry Gas only. Associated NG in the Liquids play are not included in the 7200 figure.
Haynesville rig count is down to 21 from a high of 164. Eagle Ford Dry Gas window has seen a similar type of exit. The backlog of completions in the Haynesville is pretty much worked thru. Eagle Ford still is hooking up backlog and Marcellus still has a long ways to go before the backlog in this field is completed. Marcellus figures are very difficult to obtain. Nonetheless, the current Rig Count of 350 is nowhere near the level necessary to maintain production figures.
The market will likely want to see at least 3 months of consecutive decline of production before the curve steepens on the backside. Demand side is equally as important, and NG Storage figures basically rule pricing.
Tammy probably got busted for Meth and is in jail. I've had Cleint9 on ignore for quite some time. Neither provided anything of substance to the board. And Payback is taking it easy on me lately. Life is good, NG will continue to move up over the next year or two. SD should start an upward long term trend - might get sold once the Century Plant Contract gets resolved. Those penalties and liabilities are the toughest problem to solve.
The EIA report showed a .5% week on week decline in both gross and dry gas supply. Production is still 2.4% above last years levels but we are starting to see 2013 production figures drop more often than not. This trend should accelerate. Estimates are that we need 7200 NG wells drilled in order to maintain current supply levels. Assuming a drill time of 21 days, hooked up and producing (very aggressive - 17.4 wells
per rig per year) 414 rigs would need to be drilling to maintain current supply. With a drill time of 30 days the figure would be 591 rigs drilling for dry gas. The NG rig count now stands at 350 so it's obvious that under even the most efficient/aggressive case there are not enough rigs in play to maintain production.
NG Bull Market still has just begun!
Selling Permian was a good move. SD couldn't grow production in the area, was already drilling on 10 acre spacing and having pressure problems in the older wells. The Miss has tremendous growth opportunities and that is where the focus should be. The larger question is whether to divest of the GOM, its a Cash Cow. I'll leave that to TPG, but if SD can get out of it at what they paid for it, and got the benefit of all of the cash flow it would seem to make sense. Then pay down more debt.
The Big Drag is the Century Plant Contract. OXY needs that CO2 badly, and I think we will see a deal come down if NG gets back up into the $5.50 to $6.00 area. Once that problem is shed, SD should be good to go.
(continued - evidentally got cut by too long of post or something)
CHK and XOM - The two largest producers of NG in the US have given guidance of 5% to 7% declines in NG production for 2013, and have very little CAPEX dedicated toward development of Dry Gas for 2014. Even if overall production declines by just 3% going into 2014 it will be huge.
We will see at least $5.50 to $6.00 NG before any of the E&P companies decide to shift CAPEX, and it may have to go higher than that. I'm watching the back side of the curve, which has yet to move significantly, once we see hedging opportunities in the $6.00 area the money will come back into play for NG, and of particular importance for SD holders, the Century Plant and the WTO will become a significant asset as opposed to its current liability status.
TPG is well aware of the variables at play, the GOM assets are obviously going to be sold (No Rigs Drilling Now) and if they can shed the WTO even at breakeven it will be great for SD share price. If the backside of the NG price stays low, so much the better for SD, none of the E&P companies are going to shift CAPEX plans unless they are assured of ROR's comparable to the liquids plays, and it will take time to move the Rigs if they decide to go in that direction.
NG is going to move significantly over the next 18 months, and may move radically by the end of next winter.
Looks like SD is definitely going to sell the GOM/DOR position. No rigs drilling per current presentation. Also looks like northern KS is going to get dumped or let leases expire. That 3.2 MMBOE acquisition in the GOM is not insignificant. And it looks like we recapture almost all of the lost production from the Permian sale on a boe basis, but obviously there is a lot more NG in the figure. Guidance for 2013 is 32.7 vs 33.6 for 2012 production. Cash flow from production will be significanlty less as the Permian was 85% Oil & Liquids vs. 50% or so for the Miss.
NG is still the sleeper for SD, and it looks to me like its really going to go up, perhaps as soon as this summer. The Eagle Ford has two big pipelines in the 350mmcfd area each that have come online, at least the first one was hooked up and flowing in Q4, with the second one apparently coming online Q1. NG Production dropped in Jan and Feb, but rebounded a bit in March, likely because of the Eagle Ford production coming online. Marcellus has a lot of pipelines getting hooked up as well, I can't get an accurate count on MMCFD that is being added in this field. What I do know is that at least 500 of 1,000 shut-in wells are now flowing in the Marcellus. The decline is steep in all of the shale plays. Haynesville is already in significant decline.
Associated NG production is a maximum of 15% of the roughly 70bcfd production in the US. So say around 10bcfd in production coming in largely from the Bakken and the Eagle Ford. Overall Decline is 30% from static production so around 21bcfd. There still are a few rigs drilling for dry gas in the Haynesville and Marcellus, but I don't see how that an imbalance will not occur in the not too distant future.
CHK and XOM - The two largest producers of NG in the US have given guidance of 5% to 7% declines in NG production for 2013, and have very little CAPEX dedicated toward development of Dry Gas for 2014. Even if overall production declines by just