SmallCap Posted November 30, 2010 Share Posted November 30, 2010 There was a good thread going on SandRidge in the general section but instead of putting an update there I decided to put it into the investment ideas section. Here is the link to the old discussion http://cornerofberkshireandfairfax.ca/forum/index.php?topic=3270.0 SandRidge came out with a new presentation updated through Nov 1st. http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NjkxMDN8Q2hpbGRJRD0tMXxUeXBlPTM=&t=1 Link to comment Share on other sites More sharing options...
Zorrofan Posted December 1, 2010 Share Posted December 1, 2010 I am wondering if FFH bought more on November 15th & 16th? Nov 16, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 2,381,000 Indirect Purchase at $5.08 per share. 12,095,480 Nov 15, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 929,300 Indirect Purchase at $5.15 per share. 4,785,895 Nov 12, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 1,590,500 Indirect Purchase at $5.15 per share. 8,191,075 Nov 10, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 1,250,000 Indirect Purchase at $5.17 per share. 6,462,500 Nov 9, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 230,200 Indirect Purchase at $5.15 per share. 1,185,530 Nov 8, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 1,000,000 Indirect Purchase at $5.15 per share. 5,150,000 Nov 5, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 14,203,600 Indirect Statement of Ownership N/A Nov 5, 2010 FAIRFAX FINANCIAL HOLDINGS LTD/ CAN Beneficial Owner (10% or more) 14,203,600 Indirect Statement of Ownership N/A The total holdings, including the converts, must be well over 10% now.... cheers Zorro Link to comment Share on other sites More sharing options...
Myth465 Posted December 9, 2010 Share Posted December 9, 2010 Ward eluded to having the asset sales done during the last presentation. He said it would close Q1. Here is the first announcement. http://www.tradingmarkets.com/news/press-release/egn_sd_energen-unit-buys-bone-spring-acreage-in-permian-basin-1359304.html Link to comment Share on other sites More sharing options...
Packer16 Posted December 24, 2010 Share Posted December 24, 2010 Has anyone looked at GMX Resources versus SD? SD has good gas exposure but appears to have paid a high price to get Arena's oil. Packer Link to comment Share on other sites More sharing options...
Myth465 Posted December 29, 2010 Share Posted December 29, 2010 People keep saying that but SD would likely be taken under had they not switched to oil. Look at their production costs on gas and then look at the current price of gas. Then factor in the high debt load and limited hedges. I think Ward should get a kudos for saving the company. Gas inmo has suffered a paradigm shift it just isnt worth what it used to be.... Link to comment Share on other sites More sharing options...
Myth465 Posted January 5, 2011 Share Posted January 5, 2011 It looks like they are monetizing the Mississippian asset. Very interesting. I wonder how this will effect my leaps. I would love to get leaps on the spinoff. I predict production and distributions will grow rapidly (given the 100 wells coming online). If so, so should the SP and options value :). If they can get $250 million for 43k net acres then ............. In connection with the offering, SandRidge will convey to the trust certain royalty interests in exchange for the net proceeds from the offering and units representing approximately 50% of the beneficial interest in the trust. The royalty interests will entitle the trust to a percentage of the proceeds received by SandRidge from the production of hydrocarbons from currently producing wells and development wells to be drilled by SandRidge on approximately 42,600 net acres in the Mississippian formation in northern Oklahoma. SandRidge intends to use the net proceeds from the offering to repay borrowings under its bank credit facility and for general corporate purposes. http://www.prnewswire.com/news-releases/sandridge-energy-files-registration-statement-for-initial-public-offering-of-royalty-trust-112967074.html ---- http://www.sec.gov/Archives/edgar/data/1349436/000119312511002142/ds1.htm The 650,000 net acres held by SandRidge in the Mississippian formation represent one of its core assets. SandRidge has grown its position in the Mississippian formation during the last three years based on its belief that the formation can provide significant returns on invested capital and will likely be a key asset in growing its oil and gas production over the next several years. SandRidge estimates that it will have ten rigs operating in the Mississippian formation in the first quarter of 2011. Because of its significant net acreage position in this area, SandRidge expects to focus on developing the Underlying Properties quickly to support the further development of its overall position in the Mississippian formation. ----- I thought the plan was to stop at 500k. Very Interesting indeed. So far I like it. I think Ward has found a very interesting way to raise capital with regard to the asset. I am really excited about the IDRs. If they can ramp up drilling, the IDRs will mint money. I wonder who came up with the monetization plan. That next presentation on the 11th or so will be rather interesting. Link to comment Share on other sites More sharing options...
Myth465 Posted January 6, 2011 Share Posted January 6, 2011 Tom Ward is a Genius. Prem Watsa is even smarter for betting on him. Tom is selling 50% (retaining half of the entity) of less than 10% of the Miss Play for $250 - $300 million. If 100% of the play is the same thats a value of more than $6 billion for Miss. If this is the best patch of the play but the other acres are half as good we get $3 billion. Look at SDs market cap, then keep in mind this is only Miss ...... More importantly we get a platform. They can ramp up drilling (not sure if possible, he said it would be a logistical problem), prove out the reserve, and sell to the new entity. The new entity can keep selling shares to buy more bits of the play. Production should grow rapidly, dividends will grow rapidly, and eventually we will mint money from IDRs and Dividends. We will still own 50% of the entity. I am hoping for a flat day and really considering buying deep out of the money 2013 calls. When it rains - It pours. I am due for a bad day soon, portfolio up 16% in 2 weeks. ----- Much better than CHK. Note the sale was for cold hard cash, no farm in BS. ----- I owe T Bone a cut of coffee (well perhaps much more than that). He was the first to really recognize the value in this play. His valuation for 250k acres was spot on. Shame, I didnt buy more based on his first analysis. http://cornerofberkshireandfairfax.ca/forum/index.php?topic=2825" data-ipsquote-contentclass="forums_Topic" 25583#msg25583 Link to comment Share on other sites More sharing options...
Tim Eriksen Posted January 6, 2011 Share Posted January 6, 2011 Myth While I haven't looked at the details, I would be careful comparing the value for a royalty interest with the value for the whole property. If it was a working interest your math would make sense, but a royalty interest gets a percentage of revenue without any associated cost, so it is much more valuable. Link to comment Share on other sites More sharing options...
Myth465 Posted January 6, 2011 Share Posted January 6, 2011 Thanks for the tip Tim, you have a good point. I guess the main difference would be we have to develop / prove up those reserves and they get 90% and 50% of the revenue at with no associated costs outside of the $250 million. I am excited because as they prove up the position they should be able to sell the additional non related production into the platform along similar terms. We retain 50% of the platform, and then get IDRs worth 50% after what I presume will be a very low hurdle rate. INMO we have retained access to the cash flow, but found a fairly ingenious way to monetize the assets. They also get (my guess here) - The costs of the land, the cost to develop / prove up the land, and a small return all up front. INMO this is the best outcome available and it allows Ward to maintain control without a Major / Semi Major looking over his shoulder. Thanks again though, you learn a bit each day, and I will have to noodle on this one. Link to comment Share on other sites More sharing options...
Myth465 Posted January 11, 2011 Share Posted January 11, 2011 Thanks again for your thoughts Tim. Very helpful. Here is our much awaited for presentations. http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDA5NDU3fENoaWxkSUQ9NDE5MzA4fFR5cGU9MQ==&t=1 Ward swings with a big bat. 650k in acre. I wonder when he will stop. Link to comment Share on other sites More sharing options...
alertmeipp Posted January 12, 2011 Share Posted January 12, 2011 I thought the goal was 500k. Can't blame him tho, the production #s look very impressive and 100%+ ROR is crazy. I wish I can invest directly there. Link to comment Share on other sites More sharing options...
rijk Posted February 4, 2011 Share Posted February 4, 2011 $5-6 million sign on bonus for the new CFO, or is this an annual allocation? seems a bit rich but for sure, Mr Bennett has a vested interest, at least the coming 4 years..... http://www.sec.gov/Archives/edgar/data/1349436/000134943611000105/xslF345X03/edgardoc.xml Link to comment Share on other sites More sharing options...
Myth465 Posted February 4, 2011 Share Posted February 4, 2011 $5-6 million sign on bonus for the new CFO, or is this an annual allocation? seems a bit rich but for sure, Mr Bennett has a vested interest, at least the coming 4 years..... http://www.sec.gov/Archives/edgar/data/1349436/000134943611000105/xslF345X03/edgardoc.xml When it comes to SD and CHK, I tend to ignore these things and think happy thoughts. Hopefully he brings that much value but ...... Whats more interesting is the number of rigs and how they plan to hold all that acreage they keep buying. I may buy more once I get my answer. Link to comment Share on other sites More sharing options...
alertmeipp Posted February 4, 2011 Share Posted February 4, 2011 i think the new play is going to be a home run. If it turns out to be anything close to Bakken; seriously, this will be FFH's home run as well. Prem is wise to have this in his personal account - The Brick had a nice run too ... the only sick child is FBK ... Link to comment Share on other sites More sharing options...
Myth465 Posted February 4, 2011 Share Posted February 4, 2011 i think the new play is going to be a home run. If it turns out to be anything close to Bakken; seriously, this will be FFH's home run as well. Prem is wise to have this in his personal account - The Brick had a nice run too ... the only sick child is FBK ... I agree and I think Ward will push it to 1 million acre (come on he used to work at CHK). One thing SD is good at is ramping up. When you look at what they did in the Pinion and consider that the stock price got as high as $60 based on increased drilling and nat gas prices. I believe they will do the same with oil, but will hedge the hell out of it this time going out 3-4 years. Then they will severely ramp up drilling. These guys know how to drill wells. I am gitty like a school girl about this and 3-4 other ideas. It should be an interesting year. I want to double down with 2013 leaps, but just need a few more details about the plan. All should be answered by the next call (how many acres, how many can we hold, how many can you reasonablely sell into the trust platform, whats the plan for the rest, JV or sell or more rigs and unit sells. --- FBK has a decent chance of being taken out. ATPG should get a permit one of these days. ESV has rigs coming online this year when everyone is ordering new rigs. DO should have some conclusion to the gulf situation at some point. SSW has new ships coming online and new capital for other projects. Hopefully some of these work out sooner then later. I would like for FBK to be taken out or ATPG to get a permit. Then I can take some of that capital and put it back into SD. Feb should be a fun month. Though oil has had a nice run and I am sure will suffer a pretty big pullback. Hopefully ATPG and SD are hedging. ALTIUS MINERALS CORP - Looks interesting as hell. Link to comment Share on other sites More sharing options...
alertmeipp Posted February 4, 2011 Share Posted February 4, 2011 OPTI's 2nd lien bond looks interesting to me as well. MTM 1.7EV - if they files, the 2nd lien will likely become commons.... if they finally ramp up as it restructure.. will be very interesting play. Link to comment Share on other sites More sharing options...
QLEAP Posted February 7, 2011 Share Posted February 7, 2011 Bumped to 750K acres, 11 rigs and 274 Boe/d :) http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDEyNTc0fENoaWxkSUQ9NDIzNTA1fFR5cGU9MQ==&t=1 Link to comment Share on other sites More sharing options...
Myth465 Posted February 7, 2011 Share Posted February 7, 2011 Bumped to 750K acres, 11 rigs and 274 Boe/d :) http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NDEyNTc0fENoaWxkSUQ9NDIzNTA1fFR5cGU9MQ==&t=1 We are going to need more rigs than that. Today is an interesting day, news all around with several holdings. I cant wait to hear the audio. Link to comment Share on other sites More sharing options...
Zorrofan Posted February 7, 2011 Share Posted February 7, 2011 I am very happy with the recent moves Ward has made. It should be very interesting going forward to see what he does with all the extra acerage. I hope he holds on to it and either increases the size of the royalty trust or JV with another company. Oil, gas or both - he has now positioned the company for whatever lies ahead! cheers Zorro Link to comment Share on other sites More sharing options...
bathtime Posted February 7, 2011 Share Posted February 7, 2011 A local news story on SD presenting to the community: http://news.mywebpal.com/news_tool_v2.cfm?show=localnews&pnpID=348&NewsID=994958&CategoryID=7227&on=1 "SandRidge has leases on more acreage than it can possibly drill in the length of the current lease, Kirtley emphasized Thursday, and said SandRidge will contract or otherwise involve outside companies or in the drilling process." Link to comment Share on other sites More sharing options...
Myth465 Posted February 7, 2011 Share Posted February 7, 2011 I am very happy with the recent moves Ward has made. It should be very interesting going forward to see what he does with all the extra acerage. I hope he holds on to it and either increases the size of the royalty trust or JV with another company. Oil, gas or both - he has now positioned the company for whatever lies ahead! cheers Zorro I think we have to JV or buy more rigs. I would like him to pull a CHK and do a JV where they pay us cash to deliver and pay 1/3 - 2/3 drilling costs. Im excited and really should have bought more. I may once I hear the audio feed. Zorro where do you peg value at and are you buying more. I know north of here but was waiting for the 10k to pin a number on it. I think 2013 leaps are very attractive though I dont want to pay the premium. Link to comment Share on other sites More sharing options...
Zorrofan Posted February 7, 2011 Share Posted February 7, 2011 Myth, I did a quick & dirty spreadsheet to come up with some projections. I tried to keep everything reasonable, except for 2014 where I did a little daydreaming. I kept oil prices at $85 per barrel and show steady increases in production, I have kept gas production constant (again except for 2014) & kept interest and admin costs constant at 2010 levels. Over all by 2013 SD could be making $2/per share. SD has a lot of potential with steady prices and even more if you think oil and gas prices can go higher. Not sure what the ultimate target price should be but I am confident it is a lot higher than where it is today. Ward holds a lot of shares and has both money & reputation on the line. Let me know what you think of the projections….. Sandridge projection 2011 to 2014 Year 2011 2012 2013 2014 oil production in barrels 40000 55000 70000 85000 natural gas in billions of cubic feet 112 $4.50 112 $4.75 112 $5.00 150 $8.50 Revenues: oil production $1,241,000,000 $1,706,375,000 $2,171,750,000 $2,637,125,000 natural gas $504,000,000 $532,000,000 $560,000,000 $1,275,000,000 Total revenues $1,745,000,000 $2,238,375,000 $2,731,750,000 $3,912,125,000 Less operating costs: production costs $297,840,000 $409,530,000 $521,220,000 $632,910,000 depreciation & amortization $523,500,000 $671,512,500 $819,525,000 $1,173,637,500 interest charges $258,000,000 $258,000,000 $258,000,000 $258,000,000 administration costs $165,000,000 $165,000,000 $165,000,000 $165,000,000 income taxes $0 $0 $0 $0 Total expenses $1,244,340,000 $1,504,042,500 $1,763,745,000 $2,229,547,500 Less preferred stock dividends $34,526,000 $34,526,000 $34,526,000 $34,526,000 Net income for shareholders $466,134,000 $699,806,500 $933,479,000 $1,648,051,500 Per share $1.02 $1.54 $2.05 $3.62 cheers Zorro Link to comment Share on other sites More sharing options...
Zorrofan Posted February 7, 2011 Share Posted February 7, 2011 The table looked okay in preview so I am not sure what I did wrong.....anyone, help please! cheers Zorro Link to comment Share on other sites More sharing options...
Myth465 Posted February 8, 2011 Share Posted February 8, 2011 Your numbers look very reasonable but inmo anything could happen with Net Income / CF. I believe this is and has always been an asset play. Ward confirmed it today, he said FCF will come with asset sales. I want to get the proved numbers from the 10k and then do some basic valuations on the Miss play. Right now we have too many moving parts and are selling assets every quarter. Ward said a number of key things which got me excited. 1. As suspected he is up to $1 million acres. 2. Again can only hold 250,000 with 10 - 11 rigs. 3. Noted that he believes on a whole the acreage is the same or similar throughout and has the best economics. 4. Will likely do more royalty trusts. As discussed earlier the cash up front makes this the best way to raise capital and provides a higher NPV vs. a JV. He doesnt think they can trust it all though. I am not sure why but probably because they likely have to sell producing reserves with the promise to drill new wells. 5. Will likely see a JV or true asset sell at some point for the remaining acre. --- Ward did this with SD originally and shares hit $60 on strong natural gas and drilling results. He found a nice field to drill and focused on it. Then the bottom feel out of gas. He basically bet on the wrong horse and is now doing it with oil. This time I believe he will hedge more, he knows a slow down here or in China will kill oil prices. Finally he said on the Trust deal about $110 million was for 10,000 acres. The rest was for PDP and future drilling. Thats a very interesting value for the play if I heard correctly. Interestingly enough he doesnt see gas coming back anytime soon. I agree. I plan to rotate some of my flat ATPG leaps into SD. Just have to figure out which ones to buy on the 2013. Link to comment Share on other sites More sharing options...
bathtime Posted February 9, 2011 Share Posted February 9, 2011 Fwiw, some skeptical takes on SD from an energy investor board when I asked about it: ---- Zman: I've taken a hiatus from the name until they make some guidance numbers and deliver on promises. Easier names to follow. I think the value is probably there long term but I don't feel a need to catch the bottom so am not watching it closely. Name has completely facelifted over the last year (was a Pinon Gas play, now a Permian oil play). Probably ought to pay more attention and will look at the presentation but I'm in the fool me twice, three times, etc camp there at the moment. ---- jiveyjr: re: SD…I'm expecting it to encounter resistance 8.45-8.50…I'm selling all but just a small piece of mine there….been a long, long frustrating hold for me…. --- Zman: no, the [Mississippian] well control out there should be extensive, not a problem with that, more an issue with management. The story got complex and overly leveraged to gas and under hedged and a lot of things went wrong. Management has experience but the CFO we liked quit, I don't know anything about the new guy and yet Ward continues to be pretty well paid. And has not, last I checked met a recent production goal. I probably ought to go have another look at it. --- BOP: SD — it's like the Boy Who Cried WOLF…. or LION…. or ZOMBIE… or BIG FOOT… or GIANT TOMATOES…. Someday, something will show up at SD's door… they just keep changing the HYPE and the STORY on a rolling basis. People just got a little weary… well, that, and a leveraged balance sheet peppered with accounting shenanigans and hedging swings. But SOMEday — if they live long enough — SOMEthing will indeed show up at SD's door. --- Zman: Bath – also part of that is me. I'm cold on SD right now and I don't feel the need to chase all the girls which is just the way I operate. It means I miss some moves but I do look at a lot of names and if I see a compelling reason to take a closer look I'm start working it up. --- jiveyjr Says: Bill should chime in on SD…he and I were the two longest holding bagholders in the name…I kept holding but think Bill just had enough a few months ago…. lots of people hate companies run by people that build big real estate edifices to aggrandize themselves and pay themselves heavily when shareholders are so under water….once in the doghouse it takes a while for investors to forget ---- Bill says: Regarding SD, I lost confidence in Ward and sold. I bought too high and sold too low. They are pretty good with the hype and ward hasnt met a forecast in 4 qtrs. Problems as I see it 1. Their debt is out of control. 2. Operating costs too high– sd acknowledges cost per boe is 73 to $ 80 per boe 3. Too many idled assets that they refuse to sell. 4. Ward compensation and oversight corporate governance at sd. He gets more shares when the stock dives, bonus is fixed 5. Move to oil good, but he hedged too low. based on his number released yesterday he is under water by 200-250 m. This hasnt gone thru the PL yet–Yeah I know non cash but people wont be expecting another loss this qtr. ie headline risk 6. New cfo would be a dolt if he didnt clean up the balance sheet lets throw some more one time asset impairments for the non productive ng assets to the mix and it should be an ugly qtr. 7. Ignoring all the one timers, if they presold at 86 and their cost is 80 they make 6 bucks a boe times 9 m = 54 m pre tax 500 m shares = 10 cents …—$ 8.25 stock for 10 cents of earnings 8. i wish one analyst would ask why he is losing money qtr after qtr if he makes 100 % Irr on his wells I have to conclude there are better values elsewhere. Im buying puts pre earnings ---- Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now