Nice to see you here Rat.
I have always enjoyed and appreciated your perspectives on KOG/WLL and the oil business generally.
Some of the posters here would do well to heed your advice, but I doubt that the usual "morning after" experts will.
It would sure be nice to have lunch with you sometime.
Maybe at an annual meeting in Denver sometime?
The KOG merger no doubt will help Whiting's financials some because KOG had 75% of their production hedged through the end of the year at $95-. I do not know what Whiting's hedges were, but they were a lot less than KOG's.
If the joint production matched the ratio of value between KOG and WLL, the effect of KOG's production versus WLL's would be something like 27.2% for KOG and 72.8% for Whiting.
That should give Whiting about a 5% boost in combination production if Whiting had no hedges at all.
BTW, I say "MERGER" instead of "BUY-OUT" because if we got "BOUGHT-OUT", we'd be O U T, and we'd have MONEY, but we're not "out" and we don't have any MONEY, so it was a merger albeit by unequal partners. Incidentally, KOG shareholders got 29% of the combined entity instead of 27.2%.
My perspective on this has always been a multi-year one that emphasizes full development of the Bakken/Three Forks/Red River Formations. Bumps in the road are only opportunities to buy cheap shares, even the huge manhole sized cavern that we just went through!!!!
Well, well, well, what do we have here? The usual magpies from the KOG board have found their way into this one.
Nonetheless, they are right about me posting the positive side of KOG as it was being built-up from one rig to seven and from 80K acres to many times that number.
I thought at the time, and still do, that Peterson & Catlin were doing a fine job of building equity for us shareholders, and I said so many times as myself and others went from 48-cents, to 30-cents all the way down to 17.5-cents per share as we confidently bought a huge amount of shares. We did all of this before the magpies ever heard about KOG .
As KOG hit $5+ the magpies showed up as we expected, spreading the dark side of everything as I accused them of being shorts or hired by a Hedge Fund.
That said, none of us saw the huge drop in oil prices which wiped out about 2/3 of our accumulated values. And just like before, we felt the fundamentals were still intact except for the price of oil (a big one!) and yes, have again bought more at under $30- but not much at the very bottom.
Of course the magpies sold everything at the top, shorted the stock, bought PUTS and rode it down to the bottom, closed-out their positions and reversed everything and are now riding it back up. (Yes, of course they did!)
Obviously they are always right, never wrong and are very good at writing "informative" posts promoting their interests. (?)
As I become more familiar with Whiting's management, I will probably write a few posts as to what I think about what's going on as I see it.
As far as really losing money on this, obviously buying 50K shares at seventeen-cents,really helps cushion any temporary drop in share price.
And yes, I do expect oil to be back around $75- by the Fall Driving Season and the normal Refinery Shutdown.
Meanwhile, I have invested this time in January 2017 $50- CALLS.
Mark-it Boys, let's see where that goes!
Debt problems? What debt problems?
Look at the market value of their bonds.
Look at the terms of the bonds.
Look at the time to maturity.
Look at the anticipated cash flow from operations without drilling costs if oil dropped under $40 barrel for the next five years until the first of the bonds come due.
Look at the lease terms on the drilling equipment.
Look at the debt to equity of the combined company.
Look at the more favorable terms of the larger entity in dealing with vendors.
Then look at your own standing in Whiting and close-out your short position before the annual report comes out this week!
Get it right Wheel, I bought 90% of my shares at less than eighteen cents a share, so yes I'm still way ahead of your market-timing MO. You are right in that I've never "shorted" KOG although I can easily see the wisdom of doing that especially in the rear-view mirror!
As far as taking a haircut down to around Six Bucks a share after the merger, you know darn well that ALL of the oils got a haircut of their $100+ oil prices. In fact back in 2008 oil went from $144- down to around $38- in about six-months, which is precisely where I walked in the door at forty-eight cents, then thirty-cents and finally down to the real basement of just over sixteen-cents which is where I bought in big time. Of course in hindsight, I shoulda, woulda, coulda bought it all that price!
This +/-$60 oil won't last long anyway. But I wouldn't be surprised with the fracking revolution world-wide, if oil settles around the $80-85- range for years to come. I can't think of a better catalyst for the world economy than stable oil prices in the range going forward. Plus there's plenty of money to made in the oil patch at $80-85- oil with the improvements and efficiencies in the drilling and recovery process. The keystone project can only improve on all of that.
Have a nice day wheels, you were right to short the stock and I am right to continue to own the oils and buy on the dips.
I said I was going buy on Monday and all I got was cat-calls. Some say it was "oversold", of course it was, it always is when the commodity drops and everybody wants to sell before the other guy does, and most people want to "wait and see" which doesn't exactly put a floor under the stock.
Last Friday the graph was flat but the volume was way up, a sure sign that the bottom was near.
Today the graph was way up and the volume supported that.
I'm waiting for Whiting to put something out on how they're going to adjust to these low oil prices going forward for a while.
E.g. Are they going to let go of the three rigs that KOG had up for renewal this month?
Are they still going to take delivery on the four new BOSS rigs this next Spring?
When do their hedges run out?
What are the terms on Whitings Debt? We know what KOG's terms are.
I have never lied about any of my purchases on the dips. Yes, I've been optimistic about the stock price, but oil prices changes things.
And yes I did start buying KOG at 48-cents, then 30-cents and finally at 17.5-cents culminating for 50K shares in February 2009.
I have only one handle and yes, I'm a Buy and Hold Investor even though it's pretty obvious that others can brag about their timing in and out which I will not do.
The seeds of another oil bull market are being laid in every collapse.
And yes, I will buy more on Monday, mark it!
When any commodity drops this far this fast, it always gets oversold at the bottom.
The only question is where's the bottom?
I will be buying this next week before the "followers" decide its time to buy back in, after all somebody has been buying all of the shares that have been sold so far by somebody.
All it takes is a little time to completely flip one person's bragging rites into yesterday's mistakes.
All it takes is patience, stay away from margin, message boards, and if you can find one, a successful mentor that has a LONG record of success checkered with a few losses along the way to inspire a little humility.
All debt is not equal. You are correct in describing the debt as about $5.2B and some of it ($1B) is bank credit line debt which is senior to the remaining bond debt. The bond debt from KOG has an average coupon right around 6.25% and is due in about FIVE YEARS and are NOT CALLABLE and represents about half of WHITINGS CURRENT DEBT. There is no reason for the bank(s) to call-in WHITINGS based on Oil Prices because the bank debt enjoys a senior position with plenty of collateral value even at $40- oil.
The only question is whether WHITING can lay-off enough rigs while these oil prices are low and getting lower to make the interest payments until the bond maturity dates start looming.
The answer is obviously YES.
So how secure is WHITING?
FIVE YEARS is a long time in the oil patch for things to stay the same.
$40- OIL would bring gasoline down to around $1.50, anyone want to bet that would last long?
$40- OIL and $1.50 gasoline would spark all kinds of demand and put the DOW over 24K.
None of this is going to happen because OIL is near bottoming out now and it should in around $75-80 until the demand increases come by Spring, then higher prices will come with the driving season.
Tax selling is in right now and it'll be 30-days outside before sellers can buy it back.
Or was it the ARBS squaring their accounts?
BOTH stocks show massive volume and neither reflected a drop big enough to match the volume.
No, I'm just Symon or "S" and I am up 38-times on my original 50K shares at 17.5 cents. Oops, I stand corrected, I did buy 4K at 48-cents and 6K at 30-cents. The rest are anywhere between .50 and around $12- but not too many. You can blow all you want, but that's what I've been saying for 5-years now and everybody knows it.
And Welbie lives somewhere in North Dakota but I don't know where, and I suspect you live in your Mother's basement under a 40-watt light bulb that matches your IQ.
Just wondering how many alias's do you have? And are they all buying to fill? Or did you sell at 16- and buy back in at $10-? Or are you still shorting at $6.56?
Me? I'm still sitting on a 38-bagger, but you're right it was a 94-bagger at $16- but I blew it!
It's tough, that's for sure because if I would've listened to you and sold at $16- then bought back today I would've had a 229-bagger.
So where are you now? A 2-bagger? 3-bagger? What?
For the record, I've been adding all the way down to last Friday and I'll be adding in again next week.
So let it be known, I'm long and getting longer thanks to $68- oil which really has had little effect on either KOG or Whiting so far. They're still selling oil for $95- and their debt hasn't changed by one dime.
Cheap oil is going to do what it always does, stimulates the consumption of oil leading to another round of stabilization, leading to price increases, leading to a boom, leading to a bust, leading to yadda, yadda, yadda.....
Show me the covenant that says that the $2.4B in bond debt due in five years can be called if oil prices drop.
Show me where KOG's ability to pay the interest on this debt if oil drops down to $50- and KOG drops all of their drilling rigs over the next 2- years.
Show me why Wells Fargo would call in the credit line when they have have a senior interest in a general business agreement.
Show where these agreements have not been accepted by Whiting and the debtholders.
You guys are so transparent in your efforts to mislead shareholders.
Up until now, the only holder of KOG's debt that has lost money, is Wells Fargo in their hedging unit, and that is totally unconnected to any debt issues.
Now that we've reached the "bottom of the barrel" price-wise, and maybe on this board messagewise, you guys better fill and move up. (Or is that what you're already doing?)
The trade date is the date for cost basis, not the settlement date. And selling KOG for a loss and buying it back must be 30-days away or it is indeed a "wash sale". But selling KOG and buying a different stock is not a wash sale. KOG and WLL are two completely different entities, the fact that the ARBS consider it one makes no difference to the IRS.
If you want to speculate about something consider this: is the combined affects of some selling KOG and buying WLL lower the price of KOG and raise the price of Whiting in a microsecond scenario? On the other hand, the ARBS will be selling a higher WLL to buy the lower KOG, again in a microsecond scenario.
These two cross currents are directly opposed to each other and I'm thinking that their net effect is to lower both of them temporarily until all of it is one company next week.
What do 3-15-09, 9-5-10,10-2-11, 6-7-12, 4-14-13, 12-9-13 and 12-2-14 all have in common?
On those exact dates, this message board was buzzing with doom and gloom and name-calling from the peanut gallery bragging about how they "got out" and Peterson was the worst CEO yadda, yadda, yadda.
And some of us were talking about fundamentals and the expansion of what our friends in ND were doing and buying more shares.
And then what happened?
Go check the long term chart and weep.
Live and learn, tomorrow is a new day and the next day everything changes,