Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.
Don got me interested in looking at the Permian again.
I've mentioned several times in the past six months or so, I suppose (if I haven't mentioned it, I've certainly thought it): in the short term (5 - 10
years), the Permian may be a better play than the Bakken. Like real estate, it's all about location, location, location. And right now, the Permian has the location: Wall Street is excited about this area; there is already a lot of infrastructure in place; geographically close to refineries; and, in a very, very friendly regulatory state.
There might be one concern: lack of water for fracking, perhaps, although that's more "emotional" than "rational" -- golf courses use a lot more water than the oil and gas industry, and there's no talk of closing golf courses, at least as far as I know.
So, let's compare AREX with TPLM. I know nothing about the former; something about the latter.
First TPLM, a pure-play Bakken:
- market cap: $906 million
- enterprise value: $1.3 billion
- p/e, forward: 11
- net acres: was 135,000; with recent acquisition, now about 190,000 acres (more than KOG)
- production: 7,254 boepd 4Q14 (most recent), projecting 12,000 boepd 2H15 (next two quarters)
- 2014 CAPEX:
- rigs: 8 rigs in the Bakken back in 2013
- % oil: 80%
- LOE:
- Three "divisions": E&P; midstream (Caliber); fracking (Rockpile)
AREX, pretty much a pure-play Permian:
- market cap: $700 million
- enterprise value: $1.1 billion
- p/e: 16
- net acres: 138,000
- production: 14,000 boepd
- 2014 CAPEX: $400 million
- 3 rigs; to drill 70 wells during 2014
- % oil: 41%
- % total liquid: 70%
- LOE: $6.18 (compare to $8.40 for KOG)
Maybe more later, but I know enough.
A "snapshot" of the Bakken operators can be found here.
I chose TPLM to compare with AREX because of similarities in market cap / enterprise value, in two different plays.
But how about comparing a darling of Wall Street with about the same amount of acreage as TPLM, both in the same play. Of course, I'm talking about KOG:
- market cap: $4 billion
- enterprise value: $6.5 billion
- p/e, forward: 14
- net acres: was 183,000; (173,000 in North Dakota)
- production: 34,000 boepd
- 2014 CAPEX:
- rigs: 4 rigs at the moment; CEO plans to get to 7 by end of year
- % oil: ~ 90%
- LOE: $8.40
- E&P only
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SandRidge: 2Q14
Over at Seeking Alpha, Zeits on SandRidge, and 2Q14:
I expect the company to report its best quarter in a long time, both
in terms of overall production growth and well quality. I estimate that
the company's production from its core Mid-Continent operation will
increase by ~23% sequentially, to ~62 Mboe/d, of which crude oil
production will be ~25-26 Mboe/d.
My estimate is based on the very
strong well results that the company posted during the March-May
period, including a dozen "monster" wells. The majority of the March-May
wells reached their peak production during Q2 and define the quarter's
outcome.
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The President And Main Street
Mainstream Media: What Obama gets wrong about corporate America.
Yahoo!Finance is reporting:
There are so many story lines in this article, but this is the crux of the argument: the very, very large corporations have done well under the Barack "they didn't build that" Obama administration but "Main Street" businesses have not. This is the reality:
Perhaps the most worrisome sign of trouble in the Main Street economy is an anemic pace of business startups. New research by the Brookings Institution
shows the pace of new-business creation has been declining for 30
years, with the drop intensifying during the last five years or so [coinciding with the Barack "they didn't build that" administration].
The
rate of new business creation now is only about half what it was in
1978. New businesses are vital because they tend to grow the fastest and
hire the most, whereas big companies are more likely to consolidate and
do whatever’s necessary to boost their share price — which often
includes cutting costs and payroll.
Perhaps it’s no surprise we have
chronically high unemployment at the same time there’s a shortage of
startups and younger firms.
Lots of speeches, but little follow-through:
Obama,
like all other politicians, tends to give rah-rah lip service to the
Main Street economy, but his administration hasn’t exactly gone out of
its way to help. [Think BP and the Keystone XL.]
Early initiatives and the
2009 stimulus program were generally meant to direct aid to the top of
the economic food chain in the hope it would trickle down. Some
trickled, some didn’t. There’s very little stimulus Obama can point to
that bypassed Wall Street and the big players and went straight to Main
Street. Among them: limited aid for struggling homeowners and a ramp-up
in small-business lending that some business owners say is more trouble
than it’s worth.
The writer's suggestion:
What Obama
could do, if he wanted, is find a way to drastically reduce the thicket
of regulations and the paperwork burden that plagues many businesses. In
his Economist interview, Obama scoffed at businesspeople who complain
about being overregulated. “They always complain about regulation,”
Obama said. “That’s their job.” Then he ticked off a list of things
going right — soaring stock market, record corporate profits, etc. —
that supposedly proves all the whining about overregulation is baseless.
And that's why I was interested in the article. I was curious if the writer would mention the 800-lb gorilla in the living room of every small business owner.
Nope, a word search for ObamaCare or "affordable" was not in the article. By the way, speaking of ObamaCare,
The Daily Caller has an update how well this plan is working out. Doctors are starting to refuse to take new ObamaCare patients. The numbers don't add up. It was the same thing we saw with Medicare: ask the senior sitting next to them if they talk about their doctor taking Medicare or not. LOL.
See also:
why businesses are leaving California and heading to Texas.
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A Case For Share Repurchases
Bloomberg is reporting:
Spurred on by zero-percent interest rates and the highest cash balances
on record, companies are plowing capital into the equity market to curb
supply and buttress per-share earnings. While Scott Wren of Wells Fargo
Advisors LLC says there are usually better things to do with capital,
companies with the most repurchases have beat the S&P 500 during the
bull market.
Apple, Inc. is up 25 percent since it spent $18 billion on its own
shares between January and March and rallied 32 percent after a $16
billion buyback in 2013. Those are the highest four-month returns among
the 20 biggest quarterly repurchases by any company since 1998,
according to data compiled by Bloomberg and Standard & Poor's.
S&P 500 constituents have spent $211 billion on their own stock this
year amid concern the five-year bull market is prone to selloffs such
as last week's 2.7 percent retreat.
"Inversions" are getting a lot of attention and a lot of press, but the best thing going for large corporations for the past several years has been: really, really cheap money. This has not been lost on the Warren Buffetts and the Tim Cooks of the world.
Remember: this is not an investment site. Do not make any
investment decisions based on anything you read here or think you may
have read here.
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A Note for the Granddaughters
It is difficult to remember a trip as enjoyable as our recent cross-country trip from Grapevine (Dallas, TX) to San Pedro (Los Angeles, CA) a couple of weeks ago. The highlight of that trip, without question, was the opportunity to see Grand Canyon, the Petrified Forest, and the Albuquerque area.
I have just finished reading Virginia L. Grattan's
Mary Colter: Builder Upon the Red Earth, c. 1992. It makes me want to re-visit the Grand Canyon on our way back to Dallas. [Shortly thereafter, I spent a fair amount of time with the much thicker, more definitive architectural book on Ms Colter:
Mary Colter: Architect of the Southwest, Arnold Berke, c. 2002.]
Much of what Mary Colter designed and built is now gone.
"Of all the places where she worked in the Southwest, Grand Canyon has the largest number of Colter buildings still standing. Six significant buildings remain: Hermit's Rest, the Lookout, Bright Angel Lodge, Phantom Ranch, Hopi House, and the Watchtower."
We saw many of them but not all of them.
A year before her death (1958), the La Posada in Santa Fe went on the auction block. "For Mary Colter it was a tragedy: the most beautiful and best loved of her buildings was to be dismantled and sold, the furniture to be auctioned off in Albuquerque. When La Posada closed, Colter observed,
'There's such a thing as living too long.'"
Mary Colter died at the age of 88, on January 8, 1958.
Now, unto
Mary Colter: Architect of the Southwest, Arnold Berke, c. 2002.
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Mary Elizabeth Jane Colter
From
Appetite For America, Stephen Fried, c. 2010
Within six months, Schweitzer and Huckels had bought every private collection of Indian art and crafts they could find, but now didn't know quite what to do with the pieces in that big empty space in the Albuquerque train station. So they reached out to an improbable woman none of them had ever met -- a thirty-three-year-old high school industrial arts teacher in St Paul, Minnesota, who apparently had been recommended to the main office in Kansas City by a Fred Harvey cashier in San Francisco.
Mary Elizabeth Jane Colter was a tiny dynamo, a petite, formidable woman with full lips, long, thick hair she never let down in public, wide blue eyes that cataloged every detail, and calloused hands equally adept at fine detail drawing and bricklaying. She had a strong jaw -- often used to bite people's heads off -- and an almost religious belief in her own good taste.
"An incomprehensible woman in pants" was how one admirer described her.
