But the reality is that Ray will stop any sale. At least for now.
What if his plan is to sell out in five years, and at that time the sales have tripled to $60 M annually, eps at $7.50, boe at 10 million, all funded through cash flow and debt so that the shares aren't diluted.
Would it be worth hanging onto the stock for five years? And if so, why don't the shares reflect that potential today?
These types of sales provide nice comps to place a value on Earthstone’s reserves.
I googled Zenergy and Oasis, finding an article saying that Zenergy was paid $1.45 billion. It also said this brings Oasis reserves to 169.9 million boe and increases their daily production capacity to 43,000 boe.
It did not say how much of those reserves and production figures came from Zenergy. I did note that Oasis produced 33,000 boe per day in their last quarter, and they also reported 143.3 million boe of reserves in their last 10 K.
Hard to tell what Planar's technology is worth. But in a world changing to graphene, they do not have the critical mass to do the R & D on their own.
Settlement Dte Shares Short
Nov 15, 2013:…..742
Oct 31, 2013:…1,108
Sept 30, 2013....7,498
Sept 13, 2013....2,167
Aug 30, 2013....1,610
Aug 15, 2013....1,932
July 31, 2013....1,611
July 15, 2012....1,432
Although I recognize a few thousand shares isn’t a huge amount, what I find significant is the change that occurred over the last few periods, particularly the last one.
If you will notice, the settlement date of Nov 15 relates to short shares that had been sold on Nov 12 or earlier, because of the three day delay for settlement. Also notice that earnings were announced on Nov 12.
Whoever has been previously holding short shares was clever enough not to be holding short shares at the time of the earnings announcement on Nov 12. Hmm.
As I previously posted, I’ve always felt it is harder to forecast a share price than it is to predict its future fundamentals like sales, earnings or oil & gas. There clearly wasn’t much buying interest after this month’s spectacular earning announcement Now the volume is back to almost nothing and most of it is short trading again after several weeks of no short trading.
The share price is impacted by who’s buying it…Like retail buyers, mutual funds, high frequency traders, etc. When you have a small cap stock with only one big active trader, it can move the share price just about anywhere it wants….up and down..back and forth….Over the last few years ESTE has had three or four pops that could only be explained by short term manipulation.
Last week, I just watched one of those pops take place in a company called Planar, (PLNR) What a dog that company is, yet some one over at Alpha wrote a nice article on the company the day before earnings, and in come the high frequency traders, up it went even though next quarter’s guidance is down.
So what’s a good catalyst for share price appreciation? If we wait long enough, there should be another pop caused by the high frequency traders. Or maybe a couple of mutual funds have already noticed the company and will begin to bid it up. At some point, Ray could want to cash out and put the company up for sale.. Or out of no where Zacks & Alpha could begin following Earthstone and give it a buy rating bringing in all sorts of new buyers…..or the shareholders could unite and become activist…
I have used the 6 p/e figure in several posts, but previously clarified that I was basing it off the last quarter 71 cents and annualizing it. I suppose the method of my madness should have explained again Crit, as I see the reason for your question.
I prefer using a one quarter analysis for companies going through rapid change. Oil production was 43K bbs last quarter, not the 31K like a year ago. There’s no point looking back four quarters because it was so different. On top of that for the next year or two, there is going to be more rapid growth.
The one limitation to using a single quarter is the windfall we got from higher oil prices. It won’t be near as lucrative when the next quarter gets reported. But going forward long term, the price of oil is anyone’s guess.
I've always found it's easier to predict a company's future earnings than it is the stock price.
Quite frankly, this pick used to be confusing on the future earnings. And Ray didn't help with all his goofy statements that left you wondering what he meant. Plus there wasn't a single analyst, and still isn't.
Then comes along True-truth, telling us about the new wells, pointing us to the North Dakota production website. Sometimes he gives us so much detail, like how to frac the Nebraska well and it seems a bit overwhelming. But I am delighted that we've had good predictions regarding the last two quarters. And the dialogue has been outstanding, aside from the entertainment value.
Unfortunately share prices don't always act normal. ESTE has a 6 P/E, yet FPP has a 20 P/E. This is despite ESTE's much higher growth rate. Sometimes Mister Market can be wrong for days, weeks, months and sometimes even years.
Old Timers eh? I've traded small caps for four decades and seen tricks played before you were even born.
You got to know how this CEO has a history of over promising then under performing. But since you're such a brain, why don't you tell the board which year Planar actually earned a GAAP profit.
Alex, they're on to you. I mean the fact that someone pumped up the share volume about 20 times higher than normal, and you know it is manipulation.
Now they are trashing you.
For anyone else reading this board, (and there probably aren't very many), Alex is a long timer and I have debated him about Planar for years. The rest of these new kooks are part of the trading mess you saw today. Don't believe a word of what they say.
I've seen this happen on numerous small caps. I seriously doubt the management was involved in any leak. I even doubt the Alpha writer knew what was going to happen. They just picked up on the article and let the high frequency trading rule. In a few days, this will all be over.
You and I both know there's nothing significantly new on fundamentals. While Planar got rid of the Finland money drain three quarters ago, it still has its basic problem. They are a small player in a big business and their margins stink. Plus very little growth. The earnings are pro-forma only.
Much of last year’s significant increase in BOE came from recognizing undeveloped proved reserves in the Bakken: 1,068,755 of oil, and 1603 mmcf of gas, equating to 1.337 mmboe. In the prior year ending March 31, 2012, undeveloped proved reserves were only 150,175 and 131 mmcf of gas, equating to .172 mmboe.
Most of the money invested by Earthstone this year went to convert the undeveloped property into developed property. While it would be great to see more proved reserves, short and even mid term eps only gets impacted by the new developed reserves. It will be interesting to see how much the developed reserves change., and also whether they’ve identified more undeveloped.
For anyone wanting more details on this, check out the Ryder Scott attachment to the 10-K, or 10K/A listed on sec.gov, attachment ex993.
Based on the fundamentals this share price makes no sense. It's a six p/e and ready for another eps double in the next two years.
I suppose we might have some pent up selling demand after all those months of almost no volume. Just like Punch, there might be others who need their money and didn't have much selling chance until now.
Based on the FINRA Daily files there isn't much short selling, so I suspect the sales are real.
From July 1 through Sept. 30, 2013. They brought their holdings down to 28,500 shares.
I'm glad you post the numbers early. Even if there are some minor adjustments, timely info is helpful.
Also 408,725 MCF of gas sold. Truth, I think the figures from today's report are a little higher than what you tabulated piecemeal earlier this month.
Assets are valued annually per GAAP using the standardized measure of discounted cash flow. Just look at it in the 10K report. This method takes the total proved reserves, assigns estimated revenue, costs of production, and taxes using a 10% discount of time factor. The FPP year end value of the reserves was $25,501,000 whereas the balance sheet net value of these properties was $19,850,000.
This represents a premium of $5.65 million over book Typically in other oil companies, I find the standardized measure of discounted cash flow to be a little bit less than book value, 70-80%. So that means FPP’s assets are probably understated on the balance sheet.
In addition, a 10% discount rate might be a bit overly aggressive when the well might have a 10-20 year life. Or if the proved reserves change (up or down) there could be a big impact on this reserve value. Some times proved reserves are revised upward after a well has been depleted, proof that a well’s value might have been initially understated. Then there is the price of oil. Or a change in Obama US tax rates. These items change everything, so I hope you see how important the accounting is on this issue.
Keep in mind that the standardized measure of discounted cash flow value is not reflected on the balance sheet and does not impact the profit and loss statement. It is just a measure to verify how close the balance sheet assets are.