Andy Dufresne Posted August 7, 2014 Share Posted August 7, 2014 Ahhh, you bought ITM :) thanks, I understand! Link to comment Share on other sites More sharing options...
SmallCap Posted August 12, 2014 Share Posted August 12, 2014 At this price I am interested in buying but I decided to do it in a different way and would love some input and opinion about this method of buying into PWE I am comfortable buying at this price but I was checking out the options and ended up writing some puts instead. as an explanation I am doing this in an IRA account so there isn't any margin so they reserve the cash. Right now I have over 50% in cash because I haven't found enough that I'm interested in. so I have a bunch of cash sitting there doing nothing. I wrote some Jan 2015 $7.00 puts and received $0.70 premium. my thinking went like this Result A: stock drops below $7 and I now own the stock at a effective purchase price of $6.30 - downside: similar to my buying the stock outright except I am getting in at a lower point then it is currently ($7.37) Result B: stock rises or stays stable and I make 23% return rate on my reserved cash for 5 months - downside: if it goes up significantly then I will have missed out on the significant appreciation but then again I should be content with 23% First time I have done this so I would really be interested in your thoughts about my thinking and if I am missing something. Link to comment Share on other sites More sharing options...
Uccmal Posted August 13, 2014 Share Posted August 13, 2014 I actually increased the my position size by about 15%, then backed off, and sold it for 1 cent higher. If this restatement results in the dividend getting cut, the stock will be crushed. I expect that is why it is trading down so dramatically. Whether that comes to pass or not, I would rather be less exposed right now. Link to comment Share on other sites More sharing options...
goldfinger Posted August 13, 2014 Share Posted August 13, 2014 You are completely out of it or you sold your new shares only? Link to comment Share on other sites More sharing options...
alertmeipp Posted August 14, 2014 Author Share Posted August 14, 2014 Based on what we know, it's unlikely that the dividend will be touched. They just provided an update, they found no material new info YET which is a relief (I take it they should have looked at 2014 #s by now?). Their payout ratio is low, ~25% and they have some buffers due to stronger pricing deck and production. Stock dropped nears 20%+ since the news broke, I am holding on now. Link to comment Share on other sites More sharing options...
Pick52 Posted August 14, 2014 Share Posted August 14, 2014 According to BNN revised numbers will be out Oct 14 at the latest Link to comment Share on other sites More sharing options...
Uccmal Posted August 14, 2014 Share Posted August 14, 2014 You are completely out of it or you sold your new shares only? New shares only. Alert, the thing that worries me is that their creditors may force a dividend cut. The delayed report has breached some covenants. If major bond holders are worried, there goes the dividend. Eventually it would be reinstated but not without creaming the stock price in the meantime. I am just being prudent. I have been blindsided by dividend cuts enough times. Link to comment Share on other sites More sharing options...
tengen Posted August 27, 2014 Share Posted August 27, 2014 Pennwest provides update on accounting review: http://pennwest.mediaroom.com/index.php?s=27585&item=135224 They haven't found any previously undisclosed issues. Review is still ongoing. Link to comment Share on other sites More sharing options...
Uccmal Posted September 18, 2014 Share Posted September 18, 2014 Q2 Results: http://pennwest.mediaroom.com/index.php?s=27585&item=135228 Mostly unchanged. Restatement historical in nature. Big pop today? Link to comment Share on other sites More sharing options...
Uccmal Posted September 19, 2014 Share Posted September 19, 2014 More than doubled my position yesterday and today, now that the accounting shenanigans are out of the way. Funds flow is 60 cents per quarter, eps 28; dividend is 14 cents. Trading at 25 % of some of its peers on a P/bv. This should be good for a dividend of $2.00 per year. Link to comment Share on other sites More sharing options...
Myth465 Posted September 20, 2014 Share Posted September 20, 2014 Thinking of doing the same. Already very overweight. I think they will see something big, and put the debt issues to rest once and for all....... I am also learning better to buy after the news is out. Right now only barely above lows with good news and good earnings, same with MEI. Best to wait for the fog to clear to add. Link to comment Share on other sites More sharing options...
kilroy04 Posted September 23, 2014 Share Posted September 23, 2014 You guys got me interested. First - I'm not a good commodity investor. Seems to me PennWest is a disaster of an oil and gas company (at least it was). It has a history of 10x share count expansion without concurrent value per share added. They got caught up in the trust debacle, payed too much dividend, had to borrow money to pay the dividend, issue shares, debt expanded compared to peers, dividend cut.....Stock has gone from 40's to 7. New Board May 2013 (New chair -Richard George - CEO Suncor 20 yrs). New CEO 2mo later. New CFO about a year later which led to an accounting restatement which didn't affect reserves, cash, debt, or production but did change past earnings (essentially an issue of capitalizing some expenses). Fairly immaterial to today if you believe the attached selected slides of management presentation on cost reduction, right sizing the assets base, and then subsequent forward plans. A bet on this is: 1. Oil price doesn't drop more than 10ish% 2. Cost reductions are sustainable and can be brought in line with peers 3. Management is indeed credible (so far they are doing what they have communicated) 4. Eventually the market values it similar to peers - 2-3 yr timeframe - or better Their price to risk weighted NAV is 48% vs peer average in the 70's (lowest I saw in a CIBC research report). Agreed that the next big thing is another asset sale. Though it wouldn't be surprising to see the stock price/company turn slowly. This isn't the first time PWE's management has promised.....though it was a different management last time. Downside: Zero is a very low probability. 10-20% decline would be pretty easy to see with a drop in oil price. 50% decline would take an oil price shock and perhaps a dividend cut. Seems a bit asymmetric. Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted September 23, 2014 Share Posted September 23, 2014 New Board May 2013 (New chair -Richard George - CEO Suncor 20 yrs). New CEO 2mo later. New CFO about a year later which led to an accounting restatement which didn't affect reserves, cash, debt, or production but did change past earnings (essentially an issue of capitalizing some expenses). Fairly immaterial to today if you believe the attached selected slides of management presentation on cost reduction, right sizing the assets base, and then subsequent forward plans. The restatement matters because the company's economics and margins aren't as good as what they said in the past. Suppose that a company says that its operating margin is 20% but in reality it is more like 10%. Going forward, it would make sense it model out the company based on 10% operating margins. In the case of oil and gas companies, you should value their assets based on discounted cash flow. If it turns out that expenses are being inappropriately capitalized, then you would need to adjust your DCF model and reduce the net present value of the assets. Link to comment Share on other sites More sharing options...
kilroy04 Posted September 24, 2014 Share Posted September 24, 2014 Until management proves itself for long enough to be trusted, this stock will probably trade on its dividend and the price of oil. That of course assumes debt and shares won't have to be issued to keep an appropriate replacement well drill rate - and pay the dividend. Link to comment Share on other sites More sharing options...
SmallCap Posted October 6, 2014 Share Posted October 6, 2014 I sold some more put options today. Jan 16 $7 I either make 34% on my money for the next year+ or I get into PWE at a cost basis of $4.80. I know we should always invert and try to understand the thinking of the other person in a transaction but I am really having a hard time mentally wrapping my head around the thinking of the person buying my put. Just how low do they expect this to go that they would be willing to risk 2.20 per share to make what could at very best be a $4.80 profit, and that's if the company goes bankrupt. Maybe I'm not thinking of it correctly, I admit I have never bought a put option so maybe i just don't understand the thinking going into buying one. Any input? Link to comment Share on other sites More sharing options...
plato1976 Posted October 6, 2014 Share Posted October 6, 2014 PWE doesn't seem like a low-cost producer. Did you by chance calculate its value assuming long term oil price settles down around $80? I sold some more put options today. Jan 16 $7 I either make 34% on my money for the next year+ or I get into PWE at a cost basis of $4.80. I know we should always invert and try to understand the thinking of the other person in a transaction but I am really having a hard time mentally wrapping my head around the thinking of the person buying my put. Just how low do they expect this to go that they would be willing to risk 2.20 per share to make what could at very best be a $4.80 profit, and that's if the company goes bankrupt. Maybe I'm not thinking of it correctly, I admit I have never bought a put option so maybe i just don't understand the thinking going into buying one. Any input? Link to comment Share on other sites More sharing options...
alertmeipp Posted October 6, 2014 Author Share Posted October 6, 2014 Hard to find low cost producers selling at half of book U buy Pennwest hoping it will turn to be one. Link to comment Share on other sites More sharing options...
plato1976 Posted October 6, 2014 Share Posted October 6, 2014 Did PWE effectively deleverage? Seems no Hard to find low cost producers selling at half of book U buy Pennwest hoping it will turn to be one. Link to comment Share on other sites More sharing options...
alertmeipp Posted October 6, 2014 Author Share Posted October 6, 2014 Yes and no Yes, they did sold some assets for 700m and their cash flow is improving because of cost efficient and better commodities pricing But it is far from done. Still need about 1 to 2 billions asset sale. Canadian pricing for some reason is still pretty robust so hope some one will pay a fair price but gone were the days that companies will sell shares to fund asset acquisition as share price has down big. So not many can afford. Link to comment Share on other sites More sharing options...
Cardboard Posted October 6, 2014 Share Posted October 6, 2014 http://finance.yahoo.com/news/chevron-selling-duvernay-stake-1-5b-deal-104951155--finance.html These guys sell today 30% of their Duvernay acreage for $1.5 billion. They have drilled a grand total of 16 wells on it... Do the math with PWT on 100% of their Duvernay asset and assume similar metrics and see how the debt and Enterprise Value looks like afterwards on a non-producing asset. Then there is the Encana - Athlon deal at very high metrics. People are simply panicking here because PWT is still levered, oil has weakened to $90!!! and the company has not re-hedged, but clearly operating metrics have turned and there are still many assets within the company producing next to no cash that could make this a double overnight. We should be thankful for this low share price and the fact that our managers have been disciplined not to entertain fire sales. Clearly the Kuwaitees and people at Encana did not care about the current dire forecasts that we are being fed about the oil price. Clearly deals are being made in the industry. Our time will come. Cardboard Link to comment Share on other sites More sharing options...
Myth465 Posted October 7, 2014 Share Posted October 7, 2014 I have been buying options on a D sale for a while. One day. We will have an announcement. Link to comment Share on other sites More sharing options...
kfh227 Posted October 7, 2014 Share Posted October 7, 2014 I have been buying options on a D sale for a while. One day. We will have an announcement. "D sale"? What options are you doing? Link to comment Share on other sites More sharing options...
Myth465 Posted October 7, 2014 Share Posted October 7, 2014 Duvernay acreage sale. It was listed early in the year. They expect Well Results by Nov or YE. They have something sold for Nov, and eluded to it, but something tells me its not the Duvernay. They have 2 joint ventures (Peace River and Gas Project), the Duvernay Acreage, and potentially one core play for sale. Outside of the core play, they dont get much credit for the asset. I want one sold for $1 billion with debt retired. From what I see they are moving towards best in play, and field metrics are improving. They need to complete the Financial work and begin growing again. They said they will have an update in Nov, so it will be interesting to see what is sold. My options are all 2016. Link to comment Share on other sites More sharing options...
SmallCap Posted October 7, 2014 Share Posted October 7, 2014 anyone know when the 2017 options come out? Link to comment Share on other sites More sharing options...
kfh227 Posted October 7, 2014 Share Posted October 7, 2014 I believe that PWE is on the MJSD - March, June, September and December option cycle. This is the "March Cycle". On Monday, November 17, 2014: 2017 LEAPS begin trading for the March cycle. Link to comment Share on other sites More sharing options...
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