Boozing and cheating on your wife shows lack of maturity, self control and good judgement. It eventually defines ones character. 2 months to clean up this mess or we néed a new CEO.
No arguing that Mhr has really screwed the pooch. Our esteemed CEO is a guy that has personal issues(chasing woman and booze). As a result, he lacks a great deal of judgement and the board has not held him accountable. You do not run an oil exploration and production company without tight controls. To blame it on "high growth" is #$%$ and a cover up of mistakes. Should he be fired? I'd say he has 2 months to get the house in order or he should be fired on July 1st.
All this said, MHR is no longer a company that should be valued off its potential. They have real assets and real wellhead production. The EF sale is timely in my opinion and will significantly reduce debt. The pipeline assets are being completed and will be spun off into an mlp further reducing debt and removing it from the balance sheet. Utica..... People seemed very focused on Gulfport, but have not looked at Range and the wells they have been bringing on. Massive massive wells with massive ROC. Should MHR hit the sweet spot, and they should given their acreage, they could fly.
Sum of the parts, I think MHR is worth at least 800-900 million based on current production. This is not based on "proven reserves" which may or may not be lowered when the audit is finished. Add in the pipe/mlp and I think you add in 200-250 million more. As a result, I think MHR is worth between $6.5 and $7.50 per share at a minimum. Is the Utica wells come in "strong" then I would think we can be looking at $8.0-8.5.
Bottom line, there are plenty of reasons for concern. That said, there are plenty of reasons for optimism and consideration for investment.
Through cal 2015 gild coast and used cracks vs. wti are $28.00 per barrel. Given that wnr could buy back another 15-20 million shares at current levels.......or they could buy that the 200m already announced and then start paying out some large special dividends. I am talkingm9-10% type yields.
I still think wnr is dirt cheap on a Ebitda/ev ratio. I think this can easily be a $50 stock, if not higher.
I think that given WNR's EBITDA/EV ratio that it would make perfect sense for CVI to buy WNR. Grab them before they spin off theri mlp assets and roll the entire company right into Ichan's MLP.
earnings will suck, but they already warned. did you not catch that they had 3000 barrels shut in due to weather in q1. those bbls are coming back online and in my opinion smart money will buy any "miss". what matters is that the company has massively reduced debt and poised to capture higher ng prices for the next 12-18 months as well as $90-100 oil.
this company will be spinning off the pipe, and other biz, into an mlp by the end of q2. watch. that will be more $$ in the back and a stronger balance sheet. ws is downgrading now. don't you know they do that when they are trying to buy a large position??
if wnr traded at the same EV/EBITDA 4.72 ration as vlo. wn 12 month ebitda 1,084 x 4.72 = enterprise value of 5.116billion. puts the share price of around $60-62. said another way..... there is a lot of meat left on this bone!
they locked in cash flow when the balance sheet was far heavier loaded with debt. the %vol that is hedged in the forward mkt 2014-2015 trails down and nothing thereafter. opportunity lost, but was a good move to protect a % of cash flow.
light volume intraday dip. i am adding a bit here and looking for analyst upgrades int he coming days/weeks.
ENDS 2012 With a ratio of about 3.5 to 3.6. on the low end of the entire sector and should be poised to rise to 4.5 multiple on the conservative side. that puts my "value" target of $47-48 on the "mid valuation" range that i use. $52 would be were I think we can get to should q1 margins continue as strong as they have.
i like the mention of more dividends. overall a great quarter and year.
thinking that this lights the candle and that WNR can start to really lead the (alj/dk/hfc/nti/clmt) names.