Myth465 Posted January 19, 2014 Share Posted January 19, 2014 I think Canadian pricing will converge with WTI overtime as transport improves (both via rail and pipeline expansion). Eventually they will get brent if they can export the oil outside of NA. This will take significantly lower. I dont have either priced into a valuation, but see both as tailwinds. The way I see it you can get Canadian Producers at 3x CF, or 5xCF to EV. Thats just cheap, and its based on crappy gas prices, a high looney, really wide differentials, and a lack of US interest in Canada. FX, shortening differentials, natural gas increases are all just cherries on top. Link to comment Share on other sites More sharing options...
alertmeipp Posted March 20, 2014 Share Posted March 20, 2014 Not sure if anything still follow LTS, Wright said in one of the call that the asset sale market is back. (I recall he is saying it's like day and night or something). And they manage to sell some 66% gas asset at 11x cash flow. If they can trade 11x FFO, LTS will be $20+. But the market hates it because its reserves was down 3% and FD cost jumps to $50 because of some so called one time mistakes. Stock gets no love. Link to comment Share on other sites More sharing options...
bizaro86 Posted March 20, 2014 Share Posted March 20, 2014 Not sure if anything still follow LTS, Wright said in one of the call that the asset sale market is back. (I recall he is saying it's like day and night or something). And they manage to sell some 66% gas asset at 11x cash flow. If they can trade 11x FFO, LTS will be $20+. But the market hates it because its reserves was down 3% and FD cost jumps to $50 because of some so called one time mistakes. Stock gets no love. I kind of like it, although I haven't done too deep a dive on their assets. Basically, they're trading well below their 2P valuation, and they're highly levered (debt to market cap ~2:1) so if they trade at 2P NAV discounted at 10% it'd be about a double from here. There is definite execution risk. I'm long via 2016 out of the money calls, which is a very high leverage way to play this, so its a relatively small position. Goodwill write down doesn't matter imho, and they got an excellent price on the assets they sold, so I'm encouraged by that. Also, royalty assets are the new black in the Canadian oil patch, all my friends who wanted to ask about my companies oil sands assets a few years ago now ask about our fee land assets. So they shouldn't have a hard time selling the next piece of their divestiture program. I also find the reduction in capex encouraging, if I had a spare billion dollars it'd be tempting to buy this and liquidate it piecemeal and/or let the assets produce out in harvest mode. Link to comment Share on other sites More sharing options...
Myth465 Posted March 20, 2014 Share Posted March 20, 2014 Thats good to hear alert. I was thinking about selling. bizaro did you buy calls on the Canadian exchange. I would trade my shares for calls, I think thats the best way to play LTS and PWE. My PWE calls are up 30% so far and we have 1.5 years left with a very active M&A market. These 2 companies have lots of assets to sell. The winning MLP and High Yielders can buy the assets at 6-7x CF and still come out with an accretive deal. Its a good win win. Will be interesting to watch. Link to comment Share on other sites More sharing options...
bizaro86 Posted March 21, 2014 Share Posted March 21, 2014 Thats good to hear alert. I was thinking about selling. bizaro did you buy calls on the Canadian exchange. I would trade my shares for calls, I think thats the best way to play LTS and PWE. My PWE calls are up 30% so far and we have 1.5 years left with a very active M&A market. These 2 companies have lots of assets to sell. The winning MLP and High Yielders can buy the assets at 6-7x CF and still come out with an accretive deal. Its a good win win. Will be interesting to watch. I did buy the calls in Canada, I'm not sure if they're available elsewhere. The high dividend depresses the price of the calls. Link to comment Share on other sites More sharing options...
Myth465 Posted April 10, 2014 Share Posted April 10, 2014 Just doubled my PWE leap positions, current holdings are up 50% so far. I think this could be a big winner with the D being put up for sale. Pennwest and Lightstream are pretty much in the same position. I think PWE will have a significant asset sale which will spike the leaps. Lightstream will likely do the same. I have sold my LTS position at a 30% loss and put the money into Leaps for PWE. Easier to get my hands on PWE leaps. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 12, 2014 Share Posted April 12, 2014 Cardboard/Myth - are you guys in Spyglass? They look cheap and safer with gas upside. Any reason this one does not move along with other Canadian O&G? Link to comment Share on other sites More sharing options...
Uccmal Posted April 12, 2014 Share Posted April 12, 2014 I have built a substantial common position in Pennwest so far - around 10000 shares. I am watching and waiting to see what happens. The dividend appears more than covered. The higher commodity prices are an unexpected boon, and will help get debt down quickly. Insiders are still buying here and there. The absolute worst case I can imagine is losing the significant upside to a take out at a 20 or 30% premium. Link to comment Share on other sites More sharing options...
bizaro86 Posted April 12, 2014 Share Posted April 12, 2014 I have built a substantial common position in Pennwest so far - around 10000 shares. I am watching and waiting to see what happens. The dividend appears more than covered. The higher commodity prices are an unexpected boon, and will help get debt down quickly. Insiders are still buying here and there. The absolute worst case I can imagine is losing the significant upside to a take out at a 20 or 30% premium. There is essentially only one possible buyer for penn west, it's CNQ. The big international companies wouldn't be interested, and the only other Canadians who would buy their assets are too small to swallow pen west. And CNQ never puts companies in play. If pen west sells its because they want to. Unless a financial buyer or private equity gets interested... Link to comment Share on other sites More sharing options...
Myth465 Posted April 14, 2014 Share Posted April 14, 2014 I own Spyglass, will add more colour tomorrow / later in the week. Here is a good PWE write up. http://clubs.london.edu/uploaD/clubs/2014/doc_108672_ross_bullock_penn_west_write_up_2014_01_02_3510732.pdf http://premium.investorvillage.com/uploads/85057/files/Penn%20West%20Petro.pdf Link to comment Share on other sites More sharing options...
alertmeipp Posted April 15, 2014 Share Posted April 15, 2014 Lightstream Announces Operational Update and $141 Million Asset Disposition http://finance.yahoo.com/news/lightstream-announces-operational-141-million-233500968.html Wish someone just pay 10x flow for this company. Link to comment Share on other sites More sharing options...
Myth465 Posted April 15, 2014 Share Posted April 15, 2014 Lightstream Announces Operational Update and $141 Million Asset Disposition http://finance.yahoo.com/news/lightstream-announces-operational-141-million-233500968.html Wish someone just pay 10x flow for this company. Why would anyone do that. You can buy many quality O&G holdings at 5x-6x CF. Regarding Spyglass I hold a fairly large position, as well as a 20% holding in Clarke. Spyglass was a mistake. Its a bit late in the month and we are due a dividend announcement. Hopefully they can hold it, but I am a bit nervous given the Argent situation. They will need to sell assets though to get the debt down to 1-2x and improve finding and development costs. I was banking on the fact that the CEO of Clarke, John Wright of LTS, and the CEO of Spyglass are all aware that if they cut the dividend the SP will collapse for a few years. It may all work out, but pretty much all other O&G companies I was looking at have run a bit - Legacy Oil + Gas, Crocotta, Gear Energy, Rock Energy, Twin Butte, ect. Only time will tell. I do like the low decline rates and the ability to switch easily from Oil to Gas. I figure with a falling Loonie, low decline rate wells, improved gas / oil price, narrower differentials, and better M&A market they can squeak by and hold the dividend. Leaps on PWE is a better idea though inmo. They are already up a fair bit. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 15, 2014 Share Posted April 15, 2014 wow, what happened to argent? was like 5 bucks not long ago Link to comment Share on other sites More sharing options...
longlake95 Posted April 15, 2014 Share Posted April 15, 2014 re: PWE/PWT Leaps I've already got a good size position in PWT. I'm not too up to speed on leaps. Are you referring to the Jan 2016's ($7)? So, are they almost in-the-money (7+2.40ish = 9.40 vs. stock price of 9ish USD)? PWE is still cheap, the LEAPs seem to be a no-brainer way to add more torque to a position in the common? So the only downside is a stock price below 9.40ish in Jan 2016? Link to comment Share on other sites More sharing options...
Myth465 Posted April 16, 2014 Share Posted April 16, 2014 Yes Jan 2016, I have $5 ones which break even at $8.40, and $7 ones which break even at $9.30. PWE was a $13 dollar stock before the plan / cut on sale speculation. Now they have put up 55% interest in Peace River, as well as the very hot Duvernay play for sale. This is a non producing asset with 2 wells on it. If they get $1 billion retire debt then we are sitting pretty. http://www.bloomberg.com/news/2013-06-11/penn-west-breakup-seen-returning-3-7-billion-real-m-a.html Assets including the Duvernay shale position and half of Penn West’s acreage in the Cardium region could be valued at about C$1.2 billion in a sale, Greg Pardy, a Toronto-based analyst at Royal Bank of Canada, estimated in a June 6 note to clients. ---- Post sale they can drill the 3 core areas, will likely still have Peace River, and will likely still have Montney Gas. Pennwest doesnt talk about these 2 JVs but about $2 billion was paid for 50% of them within the last few years. http://www.theglobeandmail.com/globe-investor/penn-west-mitsubishi-sign-gas-venture/article1378104/ They have drastically reduced costs / HC and are also chasing a best in baisin strategy. There are too many assets so something good should happen, and the cost cutting / debt reduction eventually has to flow through to the numbers. Link to comment Share on other sites More sharing options...
Cardboard Posted April 16, 2014 Author Share Posted April 16, 2014 I quickly looked at Spyglass and passed. Debt levels being pretty high, large dividend (poor capital allocation), John Wright on the board, gassy. After investing into Lightstream there was already too much similarity. I may tune back into it later but, I think I will wait for my current names to workout first We have seen a very interesting turn in sentiment for Canadian oil & gas since mid last year. The Ukrainian situation certainly puts a premium on stable Canadian energy, although very few are talking about that now. The XL pipeline will likely be built and with the amount of time that Obama has wasted trying to please his constituency, other shipping routes have or are being developed (East, West pipelines and oil on rail). This means a lower discount for our products going forward. The Canadian dollar has dropped a full 5 cents vs the USD => better margins, more attractive to foreign buyers. There is some rotation away from momentum stocks into undervalued, boring investments. Natural gas price is also much higher and it may stick. All of this has also improved markedly the market for asset sales which is great news for LTS and PWT. When you look at some of the metrics from recent sales, it is hard to say that we are still in a buyer's market. Cardboard Link to comment Share on other sites More sharing options...
Myth465 Posted April 16, 2014 Share Posted April 16, 2014 Yes I may eventually sell Spyglass for Zargon which I bought a few months ago and is up 10% thus far. Canadian's know what they want - Debt at 1-2xCF, small bit of growth, and sustainable dividend before asset sales. LTS, PWE, and SPY will stay down until they get there. Spyglass will have to get there, and unless they sell something it wont happen. That makes it similar to PWE, and LTS. I wish I had stuck with my basket idea, or bought more of the other names listed. I am pleased that alertmeipp said that Wright said that the market is like night and day. Say what you want about Wright. He is one of the best deal makers in the space. Hopefully it will allow all the names mentioned to sell assets, at reasonable prices. --- Also Value Digger seems to find the best O&G stocks. He posts on Seeking Alpha. Link to comment Share on other sites More sharing options...
no_free_lunch Posted April 19, 2014 Share Posted April 19, 2014 Has anyone looked into oilfield services and equipment companies? I have found 1 with FCF yield around 12%, with high acquisition related growth and yet minimal debt. It seems dirt cheap frankly but then I don't really know the sector at all. I am just wondering if there is reason to be wary this type of company or where we might be in the cycle. Link to comment Share on other sites More sharing options...
Myth465 Posted April 29, 2014 Share Posted April 29, 2014 Services have already run. I had Xtreme Drilling which was up 80% and High Arctic which ran 50% or so. Even PDS is up. Savanna Energy is up 20% in 1 month of owning it. I think the drillers have run, and probably wouldnt be adding to them, but I do still like Savanna and High Arctic. 12% CF yield is not great for services company. I am used to 25% or so. They are tied to O&G. Also sold Spyglass, will buy more Clarke instead. Bought Nighthawk as well. Link to comment Share on other sites More sharing options...
alertmeipp Posted April 30, 2014 Share Posted April 30, 2014 Canadian O&Gs have had some nice run. Are you guys holding on or taking profit? Still not expensive for sure but WTI seems weak. Link to comment Share on other sites More sharing options...
Myth465 Posted April 30, 2014 Share Posted April 30, 2014 Still holding PWE options. Thinking about LTS options but very simpler to PWE with less coverage, smaller assets, weaker Management. PWE has reduced HC significantly and that will show thru. 25% of portfolio is in Clarke which is heavy energy related. Hold Savannah, will buy back Xtreme, and will continue to accumulate Nighthawk. Biggest miss was not buying Gear Energy because I couldnt find Pink Sheet shares. They werent out yet. I missed an 80% run..... Its fueled my move to IB... Biggest win was moving on from Sandridge. What are you doing? Link to comment Share on other sites More sharing options...
alertmeipp Posted April 30, 2014 Share Posted April 30, 2014 Sold some PWE and LTS to fund some biotech craps. In and out on RMP.TO and BXE.to. PWE/LTS did well but certainly lagging behind many other O&Gs in Canada, they need to do bigger deals faster. LTS will be a double if they fix their balance sheet quick. I kept a token position on SD just to see how it goes. Like CHK and ECA better. I actually got some SGL.TO today. Link to comment Share on other sites More sharing options...
Myth465 Posted April 30, 2014 Share Posted April 30, 2014 Spyglass has completely missed the run. 15% div is nice, dont think they will cut but can never be sure. I will do well with Clarke, and I think GA at Clarke will push for them to do whats right (inmo keep the dividend and sell some assets to shrink the focus area / asset base). Exciting though. Love earnings season, and really liking IB. My portfolio is becoming Canadian dominated. Link to comment Share on other sites More sharing options...
Myth465 Posted May 2, 2014 Share Posted May 2, 2014 PWE had great results inmo. I even bought a bit back of Spy. PWE did very well with increased Gas pricing. Spy should have good earnings as well. http://pennwest.mediaroom.com/index.php?s=27585&item=135216 Link to comment Share on other sites More sharing options...
Myth465 Posted May 6, 2014 Share Posted May 6, 2014 Even lightstream had a good quarter... http://finance.yahoo.com/news/lightstream-announces-first-quarter-production-232139288.html They are really paying down that debt. Link to comment Share on other sites More sharing options...
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