Couple of keys to watch. Closer spacing in blocks and increasing efficiency. Becoming cash flow nuetral and maybe cash flow positive, allowing for a similar CAPX and pay down of the revolver. Earnings may surprise on the up side for a change due to better wells. They have learned a lot about how to drill and complete wells. In fact there may be more up side to this.
1. Phillips 66 is not building an NGL export facility. They have been building a NGL (Naural Gas Liquids) fractionator in Houston to strip out NGL's from gas to sell to local chemical companies as feed stock. The export issue involves LNG ( liquid natural gas) which takes methane and converts it to a liquid in order to ship. A company called Cheniere Energy is building the LNG plant in the Gulf which Conoco Phillips may benefit from.
2. PSX owns DCP with Spectra.not PSXP They also own CPChem with Chevron. Some of the NGL's mentioned above will go to their chemical companies along the Gulf coast, which they are also expanding.
3. As far as I now PSX will not be exporting LNG, but they do have facilities to export gasoline, diesel and other refined products. Since they have gas pipelines in the area they may be able to sell methane gas to Cheniere.
Anyone that was into the shale gas boom 5 - 7 years ago (Sothwestern, Ultra, Petrohawk etc.) knows that once those stocks hit a certain market cap level (about where KOG is today) they tripled in a very short period of time (a year or so). I owned SWN and it pretty quickly went from a $3-4 billion dollar market cap to $12 billion. It is increased cash flow and becoming cash flow neutral and then positive that drives market value. Short sellers, Market maker shenanigans, etc is all BS. Once these guys hit critical mass thay take off like a rocket. A lot of these oil drillers are at that point. Small enough to take advantage of huge revenue gains.
The Permian basin is an old oil field that has been developed for many years. OXY is the largest property owner with 2.5 million acres and the largest producer with 15% of production. There are different types of reservoirs in the basin. Approximately two-thirds of Oxy’s Permian Basin oil production is from fields that actively employ carbon dioxide (CO2) flooding, an enhanced oil recovery (EOR) technique in which CO2 is injected into oil reservoirs, causing the trapped oil to flow more easily and efficiently. Oxy’s 2.5 million net acres in the Permian contain new plays such as the Avalon shale, Bone Spring, Wolfbone/Wolfcamp, Cline shale, Wolfberry and Delaware.
I remembered Peterson talking cash flow neutral by the end of this year; however, that was before the earlier property purchase. I listened to the last webcast and what he said was that 1st half they would still need some financial help to execute the CAPEX program. Then he said they should be cash flow neutral in the 2nd half of 2014 and possibly cash flow positive. I would expect them to pay down the revolver. The 1.55 billion in bonds are not dur until 2019 to 2021 and a big chunk of that is at 5 1/2%. Another positive is continued expense reduction in drilling and completion and the fact that they have drilled more water disposal wells which will bring down costs. Finally it will be interesting to see what the reserves will balloon to when they report the end of February. As I have said before, what is going on now is what made the gas plays in the 2006 - 2008 time period explode to the upside and in some cases tripling in PPS.
Your way to early. last year the board announced the dividend increase on November 6th. Still over one month away. Last year the % increase was about 2.5% in line with expected earnings increase. For 2013 the analysts are forecasting an 11.5% earnings increase. If true maybe the company would also increase the dividend by a similar amount. That is if the board believes that the $3.88 earnings target is achievable. You could see an increase up to 4 cents per quarter. Just my guess.
11am eastern time. Should be up on the website by now. Not much new. Average barrels equivalent per day for the whole year will probably be just over 30,000, which is the lower end of the range. Reiterated that they should be cash flow neutral by the middle of 2014 and added that by YE 2014 they should be cash flow positive. They expect to be able to drill 13 wells per rig up from 9 - 10 wells. This will get them down to $9 million per well in the heart of the play. Also about 70% of production is hedged. They have about 40% of 2014 production hedged at $96 per barrel. Also expects to leave the year with production north of 40K BPOE.
Someone sold after hours without putting in a limit and someone took them to the cleaners. One stupid trade did this after hours because there is no liquidity after 4PM.
Looks like they are not locked into one increase per year. I know they raised it 2 times in a row in the beginning; however, by passing on an increase this quarter they would have signaled one increase per year. That might happen down the road, but it is really a combination of a number of different companies coming from the spin off and it seems to be taking them some time to get the payout right. With the exceptional cash flow from a rare refining opportunity (refining is an up and down business) management has been able to pay debt down to the low end of their target very fast, plus set up the MLP
The price of the stock will take care of itself as the company invests more in Chemicals, midstream & lubricants and watches DCP become larger from its own internal growth. Margins and return on equity will rise and drive earnings and stock price higher..
A pure utility stock, that is operating well would normally pay out about 65 - 70% of earnings. MDU is not a pure utility and the E&P company eats the cash flow. This year they are paying out about 50% of net Income based on the 2013 estimate. Next years consensus estimate is $1.53, so 50% would be 76.5 cents yearly. They have never really set a goal so it is almost impossible to tell what management will do.
What you are seeing is where we were in 2005 - 2008 with gas drilling. Investors woke up and saw these companies increasing production and reserves at very high year over year rates. At the time natural gas was in short supply and it was being imported. Today oil is very high and will continue to stay high and unlike natural gas it is a world wide commodity. Gas drilling companies ran into trouble because you need facilities to compress it before shipping and there are none. Plus the a-holes in DC have dragged their feet. This is only a prelude to what is going to happen and it will astound you. I got into SWN about where we are now with KOG and the stock tripled in about 8 - 10 months. Once the whiff of being cash flow neutral is in the air this will explode to the upside. By the time they are cash flow positive it will be too late.
Last split was March 1, 2006. The high just prior to that was around $94/share. When it split it went to $45. Since splits do not affect the price the only real reason for doing them is when companies want to keep the price low so that small investors can buy round lots. Over 77% of the stock is held by insiders or institutions, so it is hard to really determine if the company wants more owners. Packaged food and personal care companies, to name a few, like to split the stock and get it into more hands because it is a way of advertising. Theory is if you own the stock you will buy the product. Colgate split this year and the reason given was to make it more attractive to small shareholders.
Let me help him. All three of his points are good. HK spent most of last year acquiring property and this year drilling all out. As far as point three he is spot on about the shale stocks. I also own KOG and it is up over 50% form this year's lows.
Depends on what you think is high. My wife and I own a ton of shares in various ira, roth & a joint account. I bought between 2007 - 2010 including 5000 shares when it was 20 cents. A friend of mine's relative works for an energy hedge fund and recommended this stock because of its property in the Bakken. The friend put me on to SWN, a gas shale stock, that tripled; however, if we had known about it a year earlier would have hit a 10+ bagger. Kodiak as I said has great property and added to it over the last few years to 200K net acres. They will exit this year over 40K barrels and they expect to be cash flow positive YE 2015. It will continue to go higher until it is taken over, merges or gets so big that the year over year % change in cash flow slows. This is one of the best stocks I have ever had and rivals Amgen back in the 1990's, which I was forced to sell to pay college tuition.
Normally this would be a problem: however, wheat prices have fallen over 33% in the last 52 weeks and other commodities used in production (natural gas) and packaging (plastics) are also low. They also just started to roll out the Wonder brands. Almost all commodity prices are lower which generally signals a long term economic boom as in the early 1950's and early 1980's. Flowers is in thew sweet spot.
Gov Brown has been talking lately about being more receptive to oil & gas drilling in the large shale area. The only way California will get their house in order is to go this route. He looks at what the energy industry has done for other states. I do not think that a spin or sale of the California assets is a done deal. There is also the chemical company that can be disposed of and possible drop down of midstream assets into an MLP. OXY has many options and that is why this is taking a while to sort out.
Cramer was interviewing the CEO of Core Labs, a company that uses high tech to survey energy plays. Very successful company that has brought high tech to the oil patch. CEO mentioned Paradox as an area where they were doing work for some clients to determine prospects. I know there is a company, Bill Bennett, that has a large position in the Paraqdox, but has not devoted much CAPEX to drilling.
Looking at charts is the worst thing you can do without also looking at what causes the stock to move. Trying to predict the future from the most recent past is futility and never works. Listen to the webcasts as the Management tells you what is going to happen based on current ordering, etc. In short last Spring's chart is worthless!! CMI gives a lot of useful info and has a great handle on things. Even though revenues have not been great lately, they have not sacrificed profitability as indicated by their high margins. They are also using capital efficiently by buying back many of the service centers, which is gold mine business.