I disagree. The language from SA has changed drastically the last couple of weeks. If they don't cut, OPEC is over. SA has won. They knocked out 5mm barrels per day of future production. They will cut 500,000 with the UAE and Kuwait adding another 250,000. The rest of OPEC will lose 250-500k/d just from natural declines 1 million barrel cut is coming.
Management should be buying stock hand over fist. $25mm will not affect the viability of this company whatsoever. If it does, then the Company will be dead anyways.
there will be a new OPEC run by Russia and Iran. This is the last thing the Saudis want. The Saudis and their Arab buddies have violated the reason for OPEC-stable (and profitable) prices. They have unilaterally screwed everyone.
I finally have some numbers to help illustrate the worthlessness of SFY and other shalies. From a restructuring member at Deloitte:
"And if you look at the companies that went to auction because of bankruptcies and were purely auctioned – toes up – to basically sell it. The outcomes were terrible. Look at Dune Energy. Last December, Dune had over $1 billion reserves; it sold at auction for $19 million, and its senior debt was $67 million. BPZ Energy sold for $14.5 million, and it had $1 billion in reserves a year ago. ATP had $4.1 billion in reserves; it sold for $600 million. And American Eagle at one time $1.2 billion in reserves. It sold for $52 million. "
Most of the companies above were conventional producers. Shale is even worse.
You should write the board. They are failing shareholders by not holding management accountable. Every E&P company has slashed costs 20-30%. These clowns haven't done a thing.
thanks. I know there have been quite a few shut ins by Cabot and CHK. The numbers do show an overall trend of flat to down production for the Marcellus. Hopefully this will soon balance the market. Production everywhere else is dropping fast. Production drops should continue for several months as cos go out of business or run out of money as their hedges come off. US production is now flat year over year while demand is up about 1.5T/year.
Any ideas why total wells has barely increased when about 1000 wells (some from fracklog included) have been added in the last 9 months?
Who cares???!!! The days to cover inventory levels are not at records. Demand is up big time over the last five years. Comparing the five year average of inventories to today's is comparing apples to celery.
Dry gas production dropped 0.5% week over week. NG production is now dropping 1-2% per month now. The wells to which you are referring have cost 25-30mm dollars. They will lose a bunch of money at current prices. Furthermore, their production plummets year one also calling into question their economics. Sabine starts next month. Train two in 6 months. We will not be putting enough gas into storage next year.
SFY might wheel and deal its way out, but it would be a result of bad decision making by bondholders who will have to put up more money. On an intrinsic value basis the assets are worth zero, except for maybe some production runoff. Bond holders will learn a hard lesson-the economics of shale are fraudulently overstated.
Why do you guys keep insisting on believing these ridiculous statements? Resource potential is all make believe! SFY hasn't made money for a long time. It's assets are currently worthless. So many have bought into the shale hucksters spewing statements like this one and lost billions.
The sub debt on Magnum Hunter is where you should be looking. I don't know where it's at but a Bloomberg article had it at 40 cents on the dollar. Their Eureka Pipeline is worth $400-700mm more than enough to pay off the bank debt. That leaves $240mm worth of sub debt at market value. Their assets are worth much more than that.
Stay out of the Eagle Ford!
The EIA has probably underestimated the fall in production. The rig count now below 200 is having its impact felt. Companies are running out of money to drill so the count should go down further the next couple of months. Demand is growing nicely. Sabine will be up next month. Train 2 coming online 6 months after. The retirement of coal plants continues unabated. The demand from chemicals will arrive the end of next year. Prices will need to rise substantially to bring on new supply. This supply will come on much later than people think because the industry is running out of money.
I agree that liquidation is coming. I'm not sure on your liquidation value for the bonds though. I do not trust shalie numbers. The wells are not economic even under higher price assumptions. These companies have fooled a lot of people. Good riddance I say. The market needs to bury these zombies in order to stabilize.
Reserves are worthless at current strip price. Look for bankruptcy in the next month or two. Liquidation of assets at pennies on the dollar. That's what they're worth. Another shale Ponzi will bite the dust. SFY won't be the last. GDP, PVA, HK, SD, EOX, TPLM all will fall.
I would expect the same from Sabine and Swift after Swift declares bankruptcy. These shale companies are completely worthless. They are not going concerns. Liquidation is the only alternative at this point. Because only a small percentage of their assets will find buyers, bonds in a lot of these companies will be worthless.