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SandRidge Energy, Inc. Message Board

rainbow3100 58 posts  |  Last Activity: 5 hours ago Member since: Jul 1, 2010
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  • Reply to

    Gas Pains

    by rainbow3100 Sep 2, 2014 12:19 AM
    rainbow3100 rainbow3100 5 hours ago Flag

    No I am not a part of that group. There was a group that I nicknamed the "Dirty Dozen" a few years ago when we had intelligent debate on this board. Somebody else named it the "Dream Team" later on - that wasn't me. Those were the days when SD was on Viagra rallying from 6 to over 12.

    Wi, you will likely recall that I sold 1/2 of my position at 11.32 at that time - Prem Watsa was dumping, and so did I. SD hasn't hurt me, but it's certainly been a disappointment. I believed all of Wards BS in the WTO about 20 to 30 tcf of reserves and own minerals out there. SD is just one of many Oil & Gas companies that I own, and I'm highly diversified thru-out the market in other industries. But my favorite value play (at present) is NG, so far that hasn't worked out as well as other sectors of the market, but patience is a virtue. I'll be licking my chops in a few years.

    JMHO, we all are entitled to our own opinions.

  • Reply to

    Gas Pains

    by rainbow3100 Sep 2, 2014 12:19 AM
    rainbow3100 rainbow3100 6 hours ago Flag

    Patience grasshopper. That 5.50 to 6.00 area is coming in the next couple of years. We hit it last winter. Probably won't hit it this winter unless it gets really cold. Chico doesn't think exports to Mexico are actual exports.

    Looks like I was wrong on Mexico exports. I said they would increase by another 2.0bcfd, now it appears to be heading towards 4.0bcfd. Mexico pays over 15mcf for LNG and can't wait to get cheap USA imports. By 2019, at least 15bcfd of extra demand will hit the USA fields. NG is going to have to move up a bunch by 2017 in order to encourage drilling. Maybe Oil goes down to 60 and we see a shift, otherwise NG goes way up.

    Chico followed me over from the UPL board, where he has multiple aliases. The pendulum always swings wide but eventually hits the norm which would be 10 to 1 with Oil in the USA. We will easily see 6 NG in a few short years. JMHO, called the bottom at 2.20 (off by a bit) said we would hit 5 maybe 6 last winter - we hit it. Said 4 was the floor, blew that call by a bit, we may see 3.50, but it won't stay there for long.

    I'm looking for a nice rally next summer - all of those new wells getting connected now in the Marcellus will be in serious decline by then and Mexico will be drawing at least .5bcfd from the market.

    Watch those legacy declines in the Marcellus. The Marcellus isn't going to double production by 2019 unless NG moves much higher. Eagle Ford will have peaked by then, maybe Utica comes on strong, but from what I've seen its all about going for NGL's and the methane isn't that high there.

    The rest of the NG fields are in decline.

    JMHO, rarely attack, sometimes defend, always open for intelligent debate.

  • Reply to

    This Thursday Sept 4, 2014 NG storage report

    by neiljneil Aug 29, 2014 12:14 PM
    rainbow3100 rainbow3100 8 hours ago Flag

    EIA blew the Monterey Shale reserves by 96%. They are off by at least 50% in Marcellus with NG at 4, probably closer to 90%. There are only 6 counties in PA that are seeing much drilling - 6 Million acres maximum at present.

    So yes, I think our government agencies are a bunch of buffoons. No lies - just facts - look up Monterey Shale and see how bad EIA blew the call.

  • rainbow3100 by rainbow3100 Sep 2, 2014 12:19 AM Flag

    Marcellus continues to come on strong. Lots of backlogged wells have been connected. There are more still to come but 2015 won't see anywhere near the growth of past years. Maximum new takeaway pipeline capacity is another 1.5bcfd between now and the end of 2015.

    Utica is also coming on strong, that worries me a bit, but it's largely an NGL play.

    The demand side is going to kick in hard and soon. Mexico hits at .5bcfd in December (2014) growing to 2.0bcfd in a couple of years. And then Cheniere starts exporting the first of 4 trains starting at EOY 2015 with initial capacity of .5bcfd increasing also to 2.0bcfd. Just between Mexico and Cheniere we have 4.0bcfd extra demand coming up soon.

    Then look at all of the Coal Plant Retirements, and a bunch of Nuke Plant retirements as well - easily another 3 to 5 bcfd extra demand by 2017. Maybe wind and Solar (particularly wind) dip into this extra demand, but all of the wind and Solar needs to be backed up by NG when its cloudy or the sun doesn't shine.

    There are some good studies coming out on the Marcellus. It's not the 60,000,000 acre play that it was supposed to be. Maybe its 30,000,000 acres (still huge). But in terms of economics that make sense with NG under 6, you can cut it to less than 6 Million acres (huge again in its own right) but hardly enough to last this country for 100 years.

    EIA blew the Monterey Shale call by 96%. They have blown the Marcellus call by at least 50% and maybe 80% in today's economics. Marcellus dry gas composes the majority of the field and it's not economic at present - all of the players are shifting to the Southwest Liquids side and New York won't let them frack in their state (dry side).

    So we have at least 4.0bcfd demand coming from Mexico and Cheniere exports by 2017 and another 4bcfd of demand or more from Coal, Nuke, Industrial, and Transport by 2017 as well. And after that at least another 5bcfd of LNG exports.

    NG is going to hit that 5.50 to 6.00 area that I've been talking about and it will happen across the board on the futures markets for at least a year or two before we see CAPEX ramping up to produce dry gas. It likely will swing back to the old 10 to 1 ratio with Oil.

    JMHO, do your own DD, and diversify.

  • Reply to

    NG exports to Mexico

    by patsbaz Aug 25, 2014 2:01 PM
    rainbow3100 rainbow3100 Aug 25, 2014 10:22 PM Flag

    Mexico exports start coming on strong in December to the tune of .5bcfd ramping up to 2.0bcfd in a couple of years.

    Coal and Nuke plant retirements add at least 5bcfd of extra demand. CA is thinking hard about retiring a Nuke Plant soon in view of the recent earthquake.

    LNG exports will add at least 7bcfd of demand. Its a ways off but the first .5bcfd commences with Sabine Pass in Q4 2015.

    Marcellus continues to be a killer on supply - but there is good evidence that it will peak sometime in 2016. Utica is coming on strong as well. Eagle Ford will likely peak on NG production sometime in 2017. Bakken won't add much supply, and Haynesville won't ramp up production until NG hits at least 6.

    Wind and Solar won't take up the slack, especially solar - the greenies are getting upset about all of the streamers (birds getting caught on fire) as they fly thru the solar arrays - there is no truly green energy - every source of energy has its problems.

    CA is giving serious consideration to Nuking their current Nuke plant in view of the recent Earthquake. They already retired the other one. Nuclear Energy is the absolutely worst in terms of long term pollution problems - highly vulnerable to terrorist attacks and nobody knows where to send the spent fuel rods, so they just stay on site in swimming pools in metal warehouse shacks - look into it. It makes coal look green - at least if you take a long term view.

    Short to mid term, it looks like NG will be stuck in the 4 to 5 range. Another cold winter could obviously change things, but so could a warm one. Longer term NG moves up a bunch, should get back to that old 10 to 1 ratio with Oil.

    JMHO, I blew the call saying NG wouldn't go below 4, it did go a bit lower. But also said we would see 5, maybe 6, last winter - both happened. I'm not as bullish on this winter as I was last winter at this point. Marcellus continues to impress.

    Forecast:

    EOS - 3.5Tcf with NG moving towards 4.50

  • Reply to

    clowns

    by chicosan3 Aug 15, 2014 9:02 AM
    rainbow3100 rainbow3100 Aug 15, 2014 11:37 PM Flag

    Eagle Ford and Permian are facing similar legacy well decline problems as Marcellus. I'm not worried about either of them. Utica is getting my attention. CAPEX in Eagle Ford has totally shifted to the wet side. And Permian is for the most part oil. Bakken has a bit of gas that's going to come into play but it's not that much.

    Haynesville production isn't going to pick up anytime soon.

    Round numbers on production growth in the next year:

    Marcellus 2bcfd

    Utica 1bcfd

    Eagle Ford 1bcfd

    Permian .5bcfd

    Bakken .25bcfd

    Haynesville flat to declining.

    Decline from older conventional fields 3bcfd.

    Net gain 1.75bcfd - EIA has this slightly lower based on 70bcfd of production and 2.1% growth amounting to 1.4bcfd +\- extra supply. My round numbers are pretty close to what EIA has forecasts on supply growth.

    Utica worries me a bit further out in the next 3 to 5 years, but so far appears to be largely wet. The other basins are maturing and won't see much growth - Utica could ramp up to 5bcfd growth or more in a few years, not annually.

    Where I'm way off with EIA figures is on the demand side of the equation. EIA has us flat next year and then only slightly increasing in 2016 and 2017. They have it wrong in my opinion. Mexico exports grow to 2.0bcfd, LNG picks up EOY 2015, Industry and Coal should add at least another couple of Bcfd demand.

    Renewables are going to take up some of the flack from Coal Plant Retirements. But then there are a bunch of Nukes retiring as well. I think the EIA has blown the call on the demand side. We shall see - JMHO - could definitely be wrong, but I think EIA are idiots (remember their 96% miss on the Monterey Shale?).

    The big question is when Demand exceeds Supply - I'm thinking it happens at the end of Summer 2015 when a bunch of the Coal Plants (14GW) get retired. It may take a few months for the market to realize it.

    Do your own DD, I own many NG stocks and Mineral Rights, and am biased towards an upside movement in the commodity.

  • rainbow3100 rainbow3100 Aug 15, 2014 9:01 PM Flag

    All of the LNG export contracts that I've seen are based on HH plus 15% as well as transport costs. The foreign buyers assume all risk for HH prices going up. The processor(s) can't get financing and don't want to risk spending Billions if firm takeaway agreements are not in place. HH could go to 15, and the NG would still get sold or the buyer would have to pay a heavy penalty.

  • Reply to

    clowns

    by chicosan3 Aug 15, 2014 9:02 AM
    rainbow3100 rainbow3100 Aug 15, 2014 8:50 PM Flag

    Chico, I've got NG heading to 5.50 - 6.00 sometime between 2015 and 2017, not just front months, but on the backside out for a year or two. Utica is coming on strong, so I may prove to be wrong. But lots of demand from exports (Mexico as well as LNG), Coal Plant retirements, Industry, and Transport.

    I know you don't think 4.0bcfd of exports during this time frame amounts to much, but that's 1.460 tcf annualized - a Big Deal in my book. And there are many other demand drivers as well.

    EIA is saying only 2.0% supply growth next year.

    Marcellus pricing sucks, I'm surprised anybody would want to produce it considering better alternatives elsewhere. It trades at close to a 40% discount with HH. New infrastructure will probably give it a lift, but I don't blame Watford or anybody else for shifting CAPEX away in the meantime. A few counties in the sweetest of spots make sense, but the idea that 60,000,000 acres stack up to $100 Oil regarding ROR with HH at $4.00 Is a joke.

    Marcellus is showing signs of peaking in 2016 - See EIA drilling report legacy well decline.

    Getting hot in TX, the next couple of draws should be substantially lower. It's been over 100 across much of Texas lately and is supposed to be fairly hot for at least another week, though this summer has been relatively cool for TX so far. And very cool for much of the nation elsewhere.

    Cold winter, cool summer, will we have another cold winter again? No way that could happen right? EOS at 3.4 to 3.5tcf and burn 3.0tcf or more next winter? If that happens there will be some brownouts and NG will go a lot higher than 6 at HH and those northeast City Gates will once again see 100mcf spikes with curtailment of NG to industry.

    Lots of variables but when Majors like SHELL and XOM (Deep Pockets for CAPEX), can't make a dime in US shale gas plays, it makes you wonder how long the smaller independents are willing to produce or can produce without making a profit.

    I still like the low cost producers: long UPL, RRC, SWN, and ECA. Have quite a few others in the Oil patch as well. Diversification is key, NG heading much higher in the next couple of years.

    JMHO - EIA doesn't see it that way, but they blew the Monterey Shale call by 96% and there is no way that 60,000,000 acres in Marcellus make sense to drill at 4 NG.

  • Reply to

    NG Storage - Starting to look scary

    by critchtc21 Aug 14, 2014 10:40 AM
    rainbow3100 rainbow3100 Aug 14, 2014 8:41 PM Flag

    Gman I'm right with you on EOS storage in the 3.4 to 3.5tcf area. Quicksilver has 60GW of Coal retirements in 11 months, that would be huge - I've got that amount by 2020, with around 15GW in the next year (a very significant amount though less than what QS posted).

    Mexico exports ramp up in December or January by .5bcfd heading towards 2.0bcfd. Coal Plant retirements hit hard next summer, LNG exports start winter of 2015/2016. EIA has supply growth around 2.0% in 2015. Demand growth will be in excess of that, but not until summer 2015 when Coal Plants go offline. EIA will likely adjust pricing forecasts at that time. Hopefully many LNG export terminals have been approved by FERC and just add more upward pressure before EIA pricing forecast adjustments.

    A bunch of NUKE plants are going to retire as well according to UPL slide show which will put additional upward pressure on NG.

    Eventually NG will hit parity with Oil less the shipping and liquification process differentials - it always has in the past. Its likely going to happen by 2017 and I think we will see some solid moves by the end of next summer. A cold winter would obviously help as well. NG is up nicely in the past two years: this trend is solidly up, there will be some valleys, but the North American NG market will eventually come into equilibrium with global markets less pricing differentials for shipping and processing.

  • rainbow3100 rainbow3100 Aug 13, 2014 6:22 PM Flag

    I guess you don't consider an extra 2.0bcfd of exports to Mexico in the next year or two exports? Sabine Pass another 2.0 bcfd by 2017 with .5bcfd starting EOY 2015 and building.

  • rainbow3100 rainbow3100 Aug 13, 2014 6:19 PM Flag

    Similar to the way Neil calculates, but I've got 13 weeks averaging around 85bcf. Lots of new supply has come online in Marcellus, injections are going to be much higher than 5 year maximums for most of the weeks. Thinking closer to 3.5 at present. We may get a couple of small injections in November as well, so could see 15 weeks of injections.

    Lots of variables but I'm pretty sure we will end up north of 3.4 and wouldn't rule out. 3.6. We will need another cold winter or its unlikely NG rallies much. By next summer with Mexico exports and Coal Plant Retirements demand may outstrip supply. Winter of 2016 could be a nightmare or great depending on how you look at it. Way too much base load coal is getting retired without adequate back up.

  • Reply to

    QUESTION ABOUT FUTURES CONTRACTS

    by billythart Aug 12, 2014 10:00 AM
    rainbow3100 rainbow3100 Aug 12, 2014 6:28 PM Flag

    Billy, google Natural Gas Futures NYMEX. Producers can hedge out for years if they so choose.

    When NG was at 6.50 on the front month, the months out a year or two where nowhere close to that level.

    The futures market is still quite low and likely to stay that way until we see hints that demand is outstripping supply.

    I've got this weeks build at 85, and EOS at close to 3.5, lots of new supply hitting the market. Demand from Coal Retirements and Mexico exports will hit hard by next summer. In the mean time it's all going to be about the weather.

  • rainbow3100 rainbow3100 Aug 12, 2014 6:06 PM Flag

    Problem is we've gotten a ton of new supply and are going to get a bit more between now and fall. Some models are predicting mid-November before the first draw. Let's see how the weather unfolds. We had the coldest winter in decades followed up by what looks to be turning into the coldest summer in a decade. There is strong science indicating the lack of Sun Spots and Solar activity are to blame and that this situation may continue for years.

    If we end up with 3.5 in storage and burn 3.0 plus next winter we will see some huge spikes. But the futures markets will not rollover positively until supply starts to decline or at least looks like there is no way it will keep up with future demand.

    Cold winters and cold summers are much better for NG consumption than hot summers and mild winters. Antarctic Ice builds are setting records at present (depth of winter down there now). Arctic Ice got a good build this winter - AL Gore said the Arctic would be Ice Free by this summer, with Florida and much of low lying coastal areas soon to be under water.

    These "climate scientist" really pull my chain. The percent of CO2 in the atmosphere is .04% or .0004 of total atmospheric content. That is one part per 2,500. Everybody is entitled to their own opinion, mine is that we could double our human CO2 emissions (only a fraction of total global natural CO2 emissions) and the effect on the atmosphere and temperature would be negligible. Yet the EPA and Obama administration are going to kill Coal in the USA.

    A good argument can be made for getting rid of Mercury and other toxins that are produced from burning Coal, but this idea that increasing CO2 from 1 part per 2,500 to even a double of 2 parts per 2,500 significantly changing our climate is absurd.

    Regardless of you opinion on Climate Change (no longer called Global Warming) its good news for us NG Bulls, but bad news for consumer utility bills.

  • Reply to

    The Street Hates The Trusts

    by rainbow3100 Aug 11, 2014 7:05 PM
    rainbow3100 rainbow3100 Aug 11, 2014 9:21 PM Flag

    The way I see it is Bennett wants to simplify the Income Statement, Balance Sheet, and get the Trusts out of the way. Through the trash in the garbage and get onto better things. Drill them out ASAP and clean up accounting and associated financial issues.

    Like you said, SD has lots better areas to drill - Millions or at least several hundred thousands of acres outside of the Trusts that are far superior to drill.

    I wonder if SD would even spend the bucks on putting an ESP on a Trust well vs. an SD wholly owned well. There are no requirements to do so. All SD has to do is drill the wells on time and then move on.

    Trust owners got screwed, hopefully no major lawsuits.

  • Reply to

    The Street Hates The Trusts

    by rainbow3100 Aug 11, 2014 7:05 PM
    rainbow3100 rainbow3100 Aug 11, 2014 8:30 PM Flag

    Good questions. I doubt any more sales of Trust Shares until next year or maybe right at the end of this year so as to enter next year with a cleaner slate, but who knows. SD doesn't need the liquidity at present, and does not want to further revise guidance down for this year. In theory, SD could sell all but one share in each of the Trusts and still keep Trust production on the books - cooking the books so to speak and the street hates it.

    How quickly do you think they will sell the common stock of SDT so they can use proceeds?

    End of year or early next year.

    You estimate another 8 months to wait for SDR common to be converted and then sold.

    Likely end of next year or early 2016.

    How much of a time line do yo give PER?

    End of next year or early 2016.

    Why don't they help investors by discounting or backing out the Trust increase/decrease in production numbers separately as that is really the future of the Company.

    Trust Net Production numbers change each time SD makes a sale of Trust stocks - lots of accounting issues.

    What is the point at which new non Trust production starts to show increase which is greater than the decline rates of trust wells?

    CAPEX to non Trust production is already showing increases greater than SD's proportion of Trust wells. Think about 75% or greater interest in non Trust wells vs. 25 to 50% in Trust wells. SD is getting much better Cash Flow and ROR for wells outside of the Trusts.

  • rainbow3100 by rainbow3100 Aug 11, 2014 7:05 PM Flag

    SD Trust production goes into overall guidance and production numbers.

    Including Trust production in gross production is confusing and should be discounted by 50 to 75%.

    SDT has been drilled out and the restricted shares have now been converted to unrestricted or commons. SDR is also drilled out, but it's probably another 8 months or so before they can be converted to commons, PER will be drilled out in November.

    SD will sell all of their shares in SDT, SDR, and PER to raise money for CAPEX or pay down debt. At that point the over exaggerated productions will disappear.

    PER was the big problem this time around.

    The parent company SD only has a 25% interest in the PER at present. Hence the lower volumes in this asset are not as significant as the Mississippian assets - 75% less so for the most part, although the Mississippian also has some J/Vs in certain areas which would not be on par with a 75% adjustment.

    I've posted on several occasions in the past on the Cash Flow and EPS that the company would generate once the Trust obligations wind down. Its excellent for Cash Flow, ROR, and EPS to the parent company - SD. But production guidance figures are likely to be reduced, that's what just happened, and despite a beat on EPS, the stock got slaughtered.

  • rainbow3100 rainbow3100 Aug 11, 2014 6:04 PM Flag

    NG probably isn't going to move hard one way or another until next winter at the earliest. If I was a trader, I'd say its more likely to go down in the shoulder season than up , but not appreciably. Mexico exports start to hit in December of .5bcfd if all goes according to plan. The Big Demand generator of 2015 will be Coal Plant retirements of 14GW or more with most retirements starting in Spring and done by summer. A cold winter would obviously cause some spikes. Coal Plant retirements and Mexico exports will increase demand by 3 to 5bcfd by the end of summer. Its unlikely that supply will keep up, that's a ton of new NG that will be needed in only a few short months. Futures market needs to move up a bunch for next summer and soon, or there are going to be some severe shortages come winter of 2016.

    The Power Grid won't be able to handle an extreme cold winter in 2016, and definitely had problems this past winter, 2015 could be a problem as well. But in 2016 a tremendous amount of Base Load Coal will be off line and not enough new NG supply will be available to service extreme loads. Very alarming to say the least. I live in TX, not worried about freezing to death, and its unlikely anybody will freeze to death elsewhere, but you could see severe energy curtailment to industry causing great economic harm. Obama and the EPA boys with their MATS act and attack on coal haven't thought this thru. Things could get real nasty for our power grid in the next few years.

  • rainbow3100 rainbow3100 Aug 11, 2014 5:47 PM Flag

    I own minerals in numerous counties in OK and TX. All of the newer leases contain provision in them that allow the E&P companies to use NG on sight for rigs, trucks, generators etc. Its a bone of contention, and I've told those that want my gas for free to take a hike. Nonetheless, the industry is moving rapidly towards being able to use cheap NG on sight and the technology is there, at least on the newer rigs to run off of NG or dual fuel Diesel.

  • rainbow3100 rainbow3100 Aug 11, 2014 2:53 PM Flag

    Hope you are right bqdoo. I'm now figuring storage ends up in the 3.4 to 3.5 tcf area. Things should get interesting next year. Mexico exports ramp up by .5bcfd in December or January and massive Coal Plant retirements of 14GW or more start in the Spring: the two combined leading to at least 3bcfd of additional demand and likely closer to 5bcfd. By next summer the market should feel the impact. The question is whether supply will keep up with new demand.

    Marcellus production growth has been truly remarkable but is showing some signs of tapering off (legacy well production decline over taking new wells or at least closing the gap significantly). Utica production growth is starting to enter the picture and is likely to grow substantially, though much of it is liquids. Eagle Ford production is still growing, but it too is rapidly being overtaken by legacy well declines.

    I'm figuring 3rd to 4th quarter of 2015 is when NG starts to run. It is almost certain to take off by 2017 when the LNG exports kick in hard along with another 1.5bcfd of exports to Mexico. Once its obvious supply isn't going to keep up with demand, we could see a period of at least a year with highly elevated prices as new rigs have a waiting period of 12 months. If oil collapses, some rigs could move over to NG, but that appears doubtful at present.

  • rainbow3100 by rainbow3100 Aug 10, 2014 7:39 PM Flag

    Cleint9, please accept my apology for saying anything negative about your relative. As I recall it was around 3 years ago when you and/or Wi brought up something about Billy having his foot injured (amputated?) while serving our military in Iraq or Afghanistan.

    At the time some doubted you and even offered to help monetarily if you cared to prove it up. Perhaps you would like to expand on things now: what where his injuries, medals received, dates of service, military branch and areas of operation. I truly love war hero stories and hope that you will share things with us.

    Its likely that Billy is a Hero, please share his accomplishments with us so that we can pay due respect.

    Most of us respect and honor all of our Veterans and Active Military. Its a wonderful country that we live in and is in large part a result of having the finest military in the world.

    All of our families have suffered trauma in some sort of form: cancer, heart disease, early deaths, amputation, debilitating car wrecks, birth defects, etc. Few of us post our tragedies to a message board in search of sympathy or reward.

    Nonetheless, I humbly apologize to you and hope that you will forgive me for my transgressions, get over your anger, and share Billy's story.

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