SD - SandRidge Energy

[ourkid8]

I also forgot to add, our drilling obligations on Mississippian trust II will end Q2 2014 and the Permian will end Q4 2014 which means all capex drilling will benefit current shareholders instead of the unit holders.  This is great news for all long term shareholders in this company. 

 

Tks,

S

[alertmeipp]

What are they going to do with the water infrastructure

[Cardboard]

This pig needs to be sold quickly to Repsol so I can re-invest elsewhere. Is $9 a share in cash fine with all of you guys?

 

Cardboard

[plato1976]

you have all my shares ...

 

This pig needs to be sold quickly to Repsol so I can re-invest elsewhere. Is $9 a share in cash fine with all of you guys?

 

Cardboard

[Myth465]

Rest assured guys. I sold my last leaps yesterday so this will be taken over in 3 months.

 

Perhaps I can explain Mr Market.

I havent listened to the last 2 calls but read a bit about them and reviewed the presentations.

 

I believe one analyst said this is the same old plan from the TW days and the CEO was a bit annoyed.

When you really look at it though it is.

 

1. Overspend on Capex for the next 3 years to get to where you are cash flow natural and can cover capex.

2. Sell or JV assets which arent being valued properly to also help bridge the gap.

 

The execution, data, team, presentation to the Street, and everything else is significantly better but if you have been following since 2009 its easy to see why you wouldn't be all excited about the plan. Without a sale, SD is a bit pricey on all metrics with the exception of land value or potential PV value after all reserves are drilled. You can get Canadian companies trading at 4-5x CF with 2x Debt to Cash flow paying you a yield. These companies have wide differentials (can only get better), pay their bills in Canadian dollars (off by 10%),  great proven resource bases, and have good managements.

 

Why stay here?

[ourkid8]

Stephens & Co. Upgrades Sandridge Energy Inc. to Overweight, Raises PT to $9.00

 

http://www.streetinsider.com/Analyst+PT+Change/Stephens+Upgrades+SandRidge+Energy+(SD)+to+Overweight/9258379.html

 

2 upgrades this week:

 

3/7/2014 Stephens Upgrade Overweight

(Equal Weight) 9.00

(7.00) 6.22 6.22 0% Details

3/3/2014 Global Hunter Securities Upgrade Accumulate

(Neutral) 8.00

(N/A) 6.45 6.22 -3.57% Details

 

[Zorrofan]

Rest assured guys. I sold my last leaps yesterday so this will be taken over in 3 months.

 

Perhaps I can explain Mr Market.

I havent listened to the last 2 calls but read a bit about them and reviewed the presentations.

 

I believe one analyst said this is the same old plan from the TW days and the CEO was a bit annoyed.

When you really look at it though it is.

 

1. Overspend on Capex for the next 3 years to get to where you are cash flow natural and can cover capex.

2. Sell or JV assets which arent being valued properly to also help bridge the gap.

 

The execution, data, team, presentation to the Street, and everything else is significantly better but if you have been following since 2009 its easy to see why you wouldn't be all excited about the plan. Without a sale, SD is a bit pricey on all metrics with the exception of land value or potential PV value after all reserves are drilled. You can get Canadian companies trading at 4-5x CF with 2x Debt to Cash flow paying you a yield. These companies have wide differentials (can only get better), pay their bills in Canadian dollars (off by 10%),  great proven resource bases, and have good managements.

 

Why stay here?

 

Myth,

 

You will not get much of an argument from me  :D    If you don't mind sharing, what Canadian companies are you looking at?  I have been looking at PWE but there again, another turnaround story.....

 

cheers

Zorro

[oldye]

Rest assured guys. I sold my last leaps yesterday so this will be taken over in 3 months.

 

Perhaps I can explain Mr Market.

I havent listened to the last 2 calls but read a bit about them and reviewed the presentations.

 

I believe one analyst said this is the same old plan from the TW days and the CEO was a bit annoyed.

When you really look at it though it is.

 

1. Overspend on Capex for the next 3 years to get to where you are cash flow natural and can cover capex.

2. Sell or JV assets which arent being valued properly to also help bridge the gap.

 

The execution, data, team, presentation to the Street, and everything else is significantly better but if you have been following since 2009 its easy to see why you wouldn't be all excited about the plan. Without a sale, SD is a bit pricey on all metrics with the exception of land value or potential PV value after all reserves are drilled. You can get Canadian companies trading at 4-5x CF with 2x Debt to Cash flow paying you a yield. These companies have wide differentials (can only get better), pay their bills in Canadian dollars (off by 10%),  great proven resource bases, and have good managements.

 

Why stay here?

 

 

Oil production is going to double in the next 3 years...natural gas fundamental looks extremely bullish and if California hydro energy production is as bad as they say by next winter gas supplies will be extremely tight and prices could go parabolic like they did in some parts of the U.S this winter

 

"Overall, for the 5-week period of March 1-April 4, my model is projecting that -329 BCF will be withdrawn from storage, including the first projecting of the season projected to occur the week ending April 4. This is 10 BCF less than the initial 5-week projection made last night. Should this projecting verify, natural gas in storage will bottom out at 846 BCF on the week ending March 28. Based on projected storage five-weeks from now, natural gas continues to trade at a discount of 18.8% to a Fair Price of $5.63/MMBTU."

 

 

[Myth465]

Zero my largest holdings are Clarke and Spyglass.

I think with the rise in Nat Gas Spyglass will hold the 13% yield they have. I also dont think Clarke will go with a cut given it would kill the stock price for a few years.

Its a turnaround with a heavier debt load. I guess I am a sucker for these plays. They are also selling down assets to cover some capex and reduce debt loads.

 

I own a small bit of LTS which appears to be a mistake, and have leaps on PWE which I think is a good way to play the turn. The leverage really helps and you have 2 years.

I really wanted to buy Gear Energy but there was no OTC listing till March and it moved up 20%. I really like the CEO and Chairman there. Rock Energy is similar but it too has run.

 

I am now waiting and watching. I like Twin Butte and Legacy Oil and Gas as well but have consolidated my holdings into Spyglass, PWE, and cash. If you have an hour I think Eric Nuttall is one of the best Canadian Energy Analyst. He was on BNN Yesterday. http://www.bnn.ca/Shows/Market-Call.aspx ;) He hates debt and wouldnt recommend Spyglass or PWE, but is keener on some of the other names. Once there is a pullback I plan to get into Rock and Gear. There are probably 5 or 6 companies which will pay you 5%, trade for under 5x CF, and are growing at 8% a year. Due to this I like Canadian Energy better than US Energy for now.

 

[ourkid8]

44 stocks on takeover target radar: Morgan Stanley. - Sandridge is on the list.  :-)

 

http://m1.marketwatch.com/articles/BL-MWTELLB-13147

 

With U.S. corporations sitting on more than $1 trillion in cash and many companies facing organic growth challenges, investors are on the lookout for the next big multi-billion dollar acquisition.

About 44 multi-billion dollar cap companies have a high likelihood of receiving at least one tender offer over the next 12 months, according to a screen by Morgan Stanley.

 

[alertmeipp]

Look like they will let large chunk of their arces expired.

[rogermunibond]

It bears repeating.  They leased acreage that no one else wanted. That's why they got the dry holes.  Tom Ward, like Aubrey, once a land man, always a land man.

 

 

 

SandRidge to let its oil leases expire on much of its acreage in Kansas

 

    By Dan Voorhis

    The Wichita Eagle

    Published Friday, March 21, 2014, at 1:30 p.m.

 

A lot of land will hit the oil-lease market this year.

 

SandRidge Energy has said it will allow leases on about 700,000 gross acres of land in Kansas and Oklahoma to expire this year, and hundreds of thousands of acres more in 2015, 2016 and 2017.

 

It said in a filing with the U.S. Securities and Exchange Commission last month that it has 1,026,000 gross acres set to expire this year in northern Oklahoma and southern and western Kansas. The company said it expects to hold on to about 30 percent of that by either paying to exercise the options or by holding them by producing oil and gas.

 

SandRidge, based in Oklahoma City and Kansas’ largest oil driller, has made clear in the last year that it is interested only in Sumner, Harper, Barber and Comanche counties in Kansas, and Woods, Alfalfa and Grant counties in Oklahoma.

 

Company officials added Sumner County to their focus area last month, accumulating 117,000 acres of leases in the county. The company now has about 650,000 acres of leases in the seven counties.

 

That means the company appears ready to surrender its acreage in Clark, Cowley, Edwards, Finney, Ford, Gove, Gray, Hodgeman, Kingman, Kiowa, Ness, Scott and Wichita counties, among others.

 

“So the message is that while we will renew some acreage, we will let other acreage expire and, most importantly, we will add new acreage in better areas where we have experienced better well performance,” Lance Galvin, SandRidge’s senior vice president for Corporate Reserves, told analysts at a conference earlier this month.

 

The company declined to comment for this story.

 

And while SandRidge is only interested in the four southern counties, Kansas’ existing oil industry, composed almost entirely of vertical drillers, thrives across dozens of counties. Ellis County, home to Hays, was the state’s highest producing county in 2012, the most recent year for which annual production figures are available.

 

Views vary on what kind of impact SandRidge’s decision will have.

 

Cecil O’Brate of American Warrior, one of the state’s largest exploration companies, which drills extensively in western Kansas, said he didn’t expect the new acreage to have much effect.

 

“They leased acreage that others didn’t want, that’s why they got the dry holes,” he said. “There won’t be much demand for this acreage.”

 

The new land will accelerate the steep decline in prices paid for leases across Kansas, said longtime Wichita-based landman Fred Hambright. That decline will help make those acres affordable again for the native Kansas oil industry, he said.

 

“It will be back to normal prices,” Hambright said. “They will go back down to where they fit the economics.”

 

SandRidge, which originally purchased more than 2 million acres of leases in 2010 and 2011 under then-CEO and founder Tom Ward, has been on a huge efficiency kick under its new CEO James Bennett as it attempts to boost returns to investors. The company has tweaked its drilling operations to lower costs and raise production, reaped the benefits of its heavy investment in infrastructure and plans to drill into more oil- and gas-producing layers under existing land leases.

 

Land lease prices jumped in 2010 and 2011 from the $15 to $75 per acre range to $250 to $1,500 per acre, depending on location, when SandRidge, Shell Oil and other large out-of-state oil exploration companies rushed to accumulate large leaseholds. But the geology of the Mississippian layer proved more complex and less consistently profitable than expected. The mixed results led most of them to leave.

 

SandRidge investors deposed company founder Tom Ward in 2013 because of low profits and low stock prices.

 

Ward has since returned to Kansas with a new company, Tapstone Energy, which purchased Shell’s approximately 600,000-acre stake in southern Kansas.

 

Read more here: http://www.kansas.com/2014/03/21/3359045/sandridge-to-let-its-oil-leases.html#storylink=cpy

[ourkid8]

http://finance.yahoo.com/news/sandridge-eyeing-options-fracking-water-202021487.html

 

Does anyone know what kind or multiple this unit would fetch?

 

SandRidge eyeing options for fracking water disposal unit

 

NEW ORLEANS, March 25 (Reuters) - SandRidge Energy Inc has started taking steps toward monetizing its fracking water disposal business, the largest in the United States, as it tightens its core focus on oil and natural gas development, its chief executive said on Tuesday.

 

SandRidge has begun a financial audit of the unit, which currently processes 980 million gallons of water per day. The unit is on track to have $135 million in EBITDA this year, SandRidge Chief Executive Officer James Bennett said at the Howard Weil energy conference in New Orleans.

 

"We're taking steps to, at some point, unlock the value of it," he said. "Some time soon we want to fully monetize this." (Reporting by Ernest Scheyder; Editing by Cynthia Osterman)

 

Tks,

S

[txlaw]

http://finance.yahoo.com/news/sandridge-eyeing-options-fracking-water-202021487.html

 

Does anyone know what kind or multiple this unit would fetch?

 

SandRidge eyeing options for fracking water disposal unit

 

NEW ORLEANS, March 25 (Reuters) - SandRidge Energy Inc has started taking steps toward monetizing its fracking water disposal business, the largest in the United States, as it tightens its core focus on oil and natural gas development, its chief executive said on Tuesday.

 

SandRidge has begun a financial audit of the unit, which currently processes 980 million gallons of water per day. The unit is on track to have $135 million in EBITDA this year, SandRidge Chief Executive Officer James Bennett said at the Howard Weil energy conference in New Orleans.

 

"We're taking steps to, at some point, unlock the value of it," he said. "Some time soon we want to fully monetize this." (Reporting by Ernest Scheyder; Editing by Cynthia Osterman)

 

Tks,

S

 

Nice to hear this.

 

Not sure what EBITDA multiple this unit might fetch, but it is interesting to see what some of these publicly traded midstream MLPs are trading at.

[Cardboard]

This is just like Sears monetizing its real estate. Why don't they monetize their electric grid after that???

 

Since they are probably the 80-90% customer of that salt water disposal system it will trade at low valuation just like SD. Why? Because the main customer of that business is seen as in difficulty, in an area where Shell and most players have left town and trades at a low valuation. This means little improvement to our balance sheet upon an IPO and another layer of complexity since you then have to pay that EBITDA to the MLP who now has to answer to new investors and a different board.

 

Think about it. You are an investor into MLP's. The first thing that you look at is the yield and its sustainability and preferably growth. Your main customer is Sandridge which has a lot of luggage. Will you take a 5 or 6% yield on that or demand 10+%? Don't expect major improvement upon such financial engineering.

 

It has been 3 days in a row that oil stocks are going up while SD is flat to down. Enough is enough. The reality is that there is no real business left to sell other than the whole Mississippian thing. They need to call Repsol, get a fair deal at $9 and say goodbye!

 

Cardboard

[ourkid8]

I strongly believe TPG, Mount Kellett and Omega Advisors are all discussing next steps to drive shareholder value and essentially what that means is finding a buyer - I totally agree with you.  Sandridge needs to continue to beat their estimates for the next couple of quarters to show prospective buyers there is real value and the luggage has been removed. 

 

Thanks for your explanation, that makes sense to me...

 

Tks,

S

 

This is just like Sears monetizing its real estate. Why don't they monetize their electric grid after that???

 

Since they are probably the 80-90% customer of that salt water disposal system it will trade at low valuation just like SD. Why? Because the main customer of that business is seen as in difficulty, in an area where Shell and most players have left town and trades at a low valuation. This means little improvement to our balance sheet upon an IPO and another layer of complexity since you then have to pay that EBITDA to the MLP who now has to answer to new investors and a different board.

 

Think about it. You are an investor into MLP's. The first thing that you look at is the yield and its sustainability and preferably growth. Your main customer is Sandridge which has a lot of luggage. Will you take a 5 or 6% yield on that or demand 10+%? Don't expect major improvement upon such financial engineering.

 

It has been 3 days in a row that oil stocks are going up while SD is flat to down. Enough is enough. The reality is that there is no real business left to sell other than the whole Mississippian thing. They need to call Repsol, get a fair deal at $9 and say goodbye!

 

Cardboard

[plato1976]

I am actually ok with $8 now

(just need to move on)

 

This is just like Sears monetizing its real estate. Why don't they monetize their electric grid after that???

 

Since they are probably the 80-90% customer of that salt water disposal system it will trade at low valuation just like SD. Why? Because the main customer of that business is seen as in difficulty, in an area where Shell and most players have left town and trades at a low valuation. This means little improvement to our balance sheet upon an IPO and another layer of complexity since you then have to pay that EBITDA to the MLP who now has to answer to new investors and a different board.

 

Think about it. You are an investor into MLP's. The first thing that you look at is the yield and its sustainability and preferably growth. Your main customer is Sandridge which has a lot of luggage. Will you take a 5 or 6% yield on that or demand 10+%? Don't expect major improvement upon such financial engineering.

 

It has been 3 days in a row that oil stocks are going up while SD is flat to down. Enough is enough. The reality is that there is no real business left to sell other than the whole Mississippian thing. They need to call Repsol, get a fair deal at $9 and say goodbye!

 

Cardboard

[Parsad]

You guys are crazy and desperate!  This thing is worth north of $10.  You would be giving it away at $8.  I think they will find a buyer in the $9-11 range.  But they are smart and in no rush.  Cheers! 

[txlaw]

This is just like Sears monetizing its real estate. Why don't they monetize their electric grid after that???

 

Since they are probably the 80-90% customer of that salt water disposal system it will trade at low valuation just like SD. Why? Because the main customer of that business is seen as in difficulty, in an area where Shell and most players have left town and trades at a low valuation. This means little improvement to our balance sheet upon an IPO and another layer of complexity since you then have to pay that EBITDA to the MLP who now has to answer to new investors and a different board.

 

Think about it. You are an investor into MLP's. The first thing that you look at is the yield and its sustainability and preferably growth. Your main customer is Sandridge which has a lot of luggage. Will you take a 5 or 6% yield on that or demand 10+%? Don't expect major improvement upon such financial engineering.

 

It has been 3 days in a row that oil stocks are going up while SD is flat to down. Enough is enough. The reality is that there is no real business left to sell other than the whole Mississippian thing. They need to call Repsol, get a fair deal at $9 and say goodbye!

 

Cardboard

 

I'm all for selling the company, but I think it's wrong to assume that we're talking about a stand-alone MLP spin-off that services only SD, rather than a potential roll-up for an existing MLP.

 

Think about this.  DVN has been divesting a bunch of non-core assets and focusing on its core plays and emerging plays.  DVN considers the Mississippi-Woodford to be an emerging play worth keeping.  DVN also recently created an MLP called Enlink into which it dropped a bunch of infrastructure assets.  The assets at Enlink do NOT yet include infrastructure in the Mississippi-Woodford play.  Why wouldn't SD's infrastructure assets be a perfect candidate for a roll-up by DVN that it can then drop into Enlink?  Better yet, why wouldn't DVN just consider buying SD as a roll-up opportunity in the emerging Mississippi-Woodford play? 

 

If SD monetizes its infrastructure in a way that provides them cash for more exploration, and SD continues to have good results in the focus area, the potential purchase price goes up substantially for someone like a DVN or Repsol after a couple of quarters.  IMO, this is why Bennett is considering monetizing the infrastructure assets.

[Cardboard]

"If SD monetizes its infrastructure in a way that provides them cash for more exploration, and SD continues to have good results in the focus area, the potential purchase price goes up substantially for someone like a DVN or Repsol after a couple of quarters.  IMO, this is why Bennett is considering monetizing the infrastructure assets."

 

Guys, there is nothing left to prove out there. They have been drilling this area for years now and the potential is pretty much outlined. There is no Bakken discovery that will come up. They may improve the oil to gas content with better techniques, somewhat better curves per well but, the NAV is pretty much known and will simply go up with more wells at more optimized levels. It is all very incremental.

 

To hope for more, or like Watsa saying that this is worth $20??? (I need the stuff he is smoking), you need gas or oil to skyrocket. If that is your thesis, then there are other plays.

 

The realistic thesis here post Tow Ward was to cleanup the company, run a tight ship, improve cost and performance metrics and to sell the Gulf of Mexico assets. Mission is pretty much accomplished. The only contaminants left from the Ward era are actually these trusts which complicate our balance sheet, earnings, etc. That is why I am not in favour at all to create another of these mini monsters.

 

Of course, cash flows will keep on growing over time but, in any good sale there is something in for the buyer and for the seller. If all cash flows have been booked then the price multiple will be less. If there is a clear drilling inventory, and clear cash flow growth ahead then the multiple will be higher. The difference between selling now or later is quite small IMO if you consider the time value of money.

 

Cardboard 

[txlaw]

Guys, there is nothing left to prove out there. They have been drilling this area for years now and the potential is pretty much outlined. There is no Bakken discovery that will come up. They may improve the oil to gas content with better techniques, somewhat better curves per well but, the NAV is pretty much known and will simply go up with more wells at more optimized levels. It is all very incremental.

 

Disagree here.  NAV isn't pretty much known.  That's why SD and all pure play Mississppian-Woodford resource companies have been valued erratically over the last few years (it's not just gas/oil prices).  It is, after all, an emerging play.

 

Additionally, there is always a negative overhang associated with funding for SD.  If SD monetizes infrastructure at a fair price and plows it into drilling that results in a large IRR, that not only increases NAV from immediate drilling, but also potentially lowers SD's cost of debt and increases SD's debt capacity, allowing even more accelerated drilling in focus areas.  So I wouldn't necessarily say that it's incremental value -- that depends on their success rate and the IRRs associated with the drilling.

 

And it remains to be seen whether the "stacked play" potential represents even more upside.

 

To hope for more, or like Watsa saying that this is worth $20??? (I need the stuff he is smoking), you need gas or oil to skyrocket. If that is your thesis, then there are other plays.

 

I certainly do not believe that we're talking about $20.  But there's still a huge difference between $8 and $12 (or even $10).

 

The realistic thesis here post Tow Ward was to cleanup the company, run a tight ship, improve cost and performance metrics and to sell the Gulf of Mexico assets. Mission is pretty much accomplished. The only contaminants left from the Ward era are actually these trusts which complicate our balance sheet, earnings, etc. That is why I am not in favour at all to create another of these mini monsters.

 

I don't think it's fair to compare the royalty trusts with an MLP spin-off.  Still, I would agree that it would be better for them keep the infrastructure assets if they can't get a cash buyer involved.

[alertmeipp]

If I have billions to spend,  why would I buy SD instead of PWE?

[Cardboard]

"If SD monetizes infrastructure at a fair price and plows it into drilling that results in a large IRR, that not only increases NAV from immediate drilling, but also potentially lowers SD's cost of debt and increases SD's debt capacity, allowing even more accelerated drilling in focus areas."

 

Honestly Txlaw, there is always too much hope and IF's in your analysis. Weather it is SHLD, CLWR, LVLT, BBRY and now SD. In that sentence above, you are assuming multiple positives all inter-related. Everything has to move in sync to create the value that your are hoping for.

 

Things rarely if ever work that way. I guarantee you that there is some disappointment that we are not thinking about that will prevent SD from achieving such exact scenario.

 

While I am optimistic about their future, I am also a realist. There is nothing wrong for them to aim for the approach that you are describing above, but for us to hang on for that extra buck or two is simply not worth it IMO, especially after a 5 year bull market and potential major slowdown in China. If the market rolls over, this thing will sell for $2 or $3 a share with the amount of debt that they still have. Then forget about any kind of credit upgrade. Moreover in a few years, debt maturities won't look that far on the horizon anymore.

 

As a money manager, pocket the 40-50% gain now and look for other opportunities to make the missing 20% via a 50%, double or triple. Let the risk and some icing on the cake to the operator who will take that firm under their umbrella.

 

The other problem that I see here is that many have followed Watsa into this thing and are unaware of other opportunities in the oil patch as mentioned by Alertmeipp. Being involved with other firms, is giving me an appreciation for what SD is and is not.

 

Cardboard

[txlaw]

"If SD monetizes infrastructure at a fair price and plows it into drilling that results in a large IRR, that not only increases NAV from immediate drilling, but also potentially lowers SD's cost of debt and increases SD's debt capacity, allowing even more accelerated drilling in focus areas."

 

Honestly Txlaw, there is always too much hope and IF's in your analysis. Weather it is SHLD, CLWR, LVLT, BBRY and now SD. In that sentence above, you are assuming multiple positives all inter-related. Everything has to move in sync to create the value that your are hoping for.

 

Things rarely if ever work that way. I guarantee you that there is some disappointment that we are not thinking about that will prevent SD from achieving such exact scenario.

 

While I am optimistic about their future, I am also a realist. There is nothing wrong for them to aim for the approach that you are describing above, but for us to hang on for that extra buck or two is simply not worth it IMO, especially after a 5 year bull market and potential major slowdown in China. If the market rolls over, this thing will sell for $2 or $3 a share with the amount of debt that they still have. Then forget about any kind of credit upgrade. Moreover in a few years, debt maturities won't look that far on the horizon anymore.

 

It's not about optimism vs. realism.  It's about not trading away optionality for an overly emotional need to realize (tax inefficient) cash return as soon as possible.  Especially when uncertainty about that optionality recedes with each passing quarter.

 

See, all of those names you mentioned were/are all low downside, potentially high return investments.  That is, I was willing to trade away the opportunity cost of a reasonably certain decent/high return for the possibility of a slam dunk or, in the alternative, a par/subpar positive return.  (Well, except LVLT, which I just think is a unique asset and biz that has paid off immensely -- I initially bought at $15 per share -- and will continue to do so going forward, IMO.)  The reality is that if I wanted simply to have a high probability of making a decent/great return over time, I would make my portfolio into something like Ericopoly's.  All BAC, all the time (although I hear he has been hedging his position as of late).  BRK LEAPs.  And maybe a few other ideas.

 

But I choose to construct my portfolio so that I don't miss out on these opportunities with optionality.  And because nobody ever knows how much time it will take, if ever, to realize optionality, I don't think one should get too discouraged when it takes longer than expected to remove the uncertainty.  Cardboard, I would note you have a history of freaking out and criticizing management when things take longer to "work out" than you want them to. 

 

As a money manager, pocket the 40-50% gain now and look for other opportunities to make the missing 20% via a 50%, double or triple. Let the risk and some icing on the cake to the operator who will take that firm under their umbrella.

 

This thinking is part of the the problem.  Management's job is not to assume that its shareholders are sophisticated value investors who can redeploy cash into high return opportunities.  On the contrary, with all this talk of overvalued markets and looming geopolitical disasters, it might actually be prudent for management to assume that shareholders can only earn a rather low market return upon redeployment of their freed up cash.

 

Yes, I know that I could easily redeploy cash generated from an SD sale into other opportunities that are potentially much higher return.  But my own position cannot dictate what the proper action is for managers who are focused on maximizing the return of the hypothetical average shareholder.

 

The other problem that I see here is that many have followed Watsa into this thing and are unaware of other opportunities in the oil patch as mentioned by Alertmeipp. Being involved with other firms, is giving me an appreciation for what SD is and is not.

 

I have enough of the oil patch in my portfolio (CHK dominates my portfolio and is much lower risk than the names all of you oil patch guys are talking about), and I don't really want to own the oil patch over the long term anyway.  It's not worth my time and effort to look for new options in that sector given opportunities in other sectors that I believe are better and lower risk. 

[alertmeipp]

I prefer chk over SD.  PWE is within their cash flow if they cut dividend now so there is buffer. Chk has tons of good assets, so I like it a lot too