given2invest Posted January 11, 2019 Share Posted January 11, 2019 This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this. SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off. A+ post. Basically sums it up. I've been looking at this for months (I know nothing about E&P/Oil/Gas but I'm a sucker) and I come up with the same things whenever I consider buying: A very robust auction yielded shit bids when Oil was much higher & I can buy much more liquid interesting E&P stocks now that didn't have a robust auction that yielded shit bids. I don't think the CO vote means much because the stock barely moved the next day. Even the way they reported the result of the auction was sketch with a range of indicative values. I mean nobody wanted these assets. Link to comment Share on other sites More sharing options...
samwise Posted January 12, 2019 Share Posted January 12, 2019 Happy to agree it's a POS in terms of history of prior management, quality of Mississippi Lime assets, previous leverage levels, post bankruptcy behaviour etc etc. All previous investors have been burned and scarred. It's an impressive list : Prem Watsa, Icahn is underwater and so is almost everyone who has posted in the 200 pages before this and didn't sell opportunistically. I'm underwater too. But does this POS have a price, a fair value? How does one estimate value here? Btw why is this a melting ice cube? They grew production last quarter. Not that I have anything against a liquidation that delivers value. Link to comment Share on other sites More sharing options...
meiroy Posted January 12, 2019 Share Posted January 12, 2019 I bought quite a lot of this in December. I'm wondering why Icahn has been so quiet. Link to comment Share on other sites More sharing options...
Spekulatius Posted January 12, 2019 Share Posted January 12, 2019 This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this. SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off. Probably the best answer to my question above. I have to give SD cudos for having a good balance sheet and GAAP profits, so there is that. But the E&P business is messed up. I used to do way more in this field, but noticed that share revolution really messed up this field in terms of capital allocation and consider it uninvestable. My thinking regards to SD is that if they got so poor bids when the price of crude was much higher and the capital markets much more apprehensive, that I have not business betting these folks are all wrong and I am right buying in this. Sure, there is a right price for everything. When this stock trades at a PE of 6x and a FCF yield of 10%, I am going to take a look. until then, one is better of just sticking with the majors or the large Canadian long life oil sand plays perhaps. At least the majors understand capital allocation and pay dividends. Link to comment Share on other sites More sharing options...
samwise Posted January 13, 2019 Share Posted January 13, 2019 I bought quite a lot of this in December. I'm wondering why Icahn has been so quiet. The company is looking for a new CEO. If you listen to Icahn's interviews, that's his method: get a good operator to run things, but keep control of capital allocation. Since capital allocation is the big risk here, as Spekulatis rightly pointed out, that's a good situation for minority investors. I don't think Icahn will spend much mindshare here. This is a small company compared to his 20B reported portfolio. Good thing is they can't resist him like AIG did. Link to comment Share on other sites More sharing options...
aws Posted March 14, 2019 Share Posted March 14, 2019 What do people think of the new CEO and the 10-K? It looks stupid cheap with no debt, 1/3rd of book value, and tax assets of something like $15/sh not included in book value ensuring that if they can ever make a profit it would be tax free. But then I don't really know how to evaluate their drilling program and all of their cashflow is getting deployed there. I have recently taken a position in MPO, which also operates in the Miss Lime and tried to merge with SD last year, because I like their plan of pausing drilling and returning capital to shareholders through buybacks. MPO has less upside potential, but also less likely to waste what they have left in assets. Link to comment Share on other sites More sharing options...
Gregmal Posted March 15, 2019 Share Posted March 15, 2019 I admittedly know nothing current(from within the past quarter or two) regarding economics; this one is strictly in the no touch category for me. But, has SD ever demonstrated that they can sustainably profit from drilling their locations? I ask this not to be a jerk but my understanding of the Mississippi Lime, and pretty much all of their previous endeavors, plus the trusts they spun out, all demonstrate that this is a total crap shoot, at best. The decline rates are way higher than industry standard, and it seems they just remain committed to pouring money into the assets they have rather than cutting bait and liquidating/selling themselves. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 15, 2019 Share Posted March 15, 2019 It looks like one roughly buys this for half the asset value (PV-10). The current business plan suggest they spent $170M in Capex this year and they will have $180M in EBITDA, which means that they are at best FCF neutral. they really should be slowly (or quickly ! ) liquidating, since they are trading for half the asset value, which if this continues, means that every dollar in cash gets converted into 50c in the ground. So, if they continue to operate cash flow neutral all is good, until they find another sinkhole and an asset is written off, which is pretty much unavoidable in the E&P business. My prediction is that with the current modus operandi, the shareholders won’t ever see a cent, management will keep drilling, until something untoward happens and/or bankers shut them down. The only way out for shareholders is if another company buys them out. Link to comment Share on other sites More sharing options...
meiroy Posted March 15, 2019 Share Posted March 15, 2019 Icahn owns 13% of the company and has control of the board. Link to comment Share on other sites More sharing options...
aws Posted March 15, 2019 Share Posted March 15, 2019 I guess we'll have to see if Icahn's board control and new CEO can avoid the favorite pastime of a lot of E&P companies by destroying the value they have left. There is enormous upside if that can be accomplished. They were offered what were hopefully insulting low values when considering selling the company, and they have the balance sheet where they could take on acquisitions in a depressed market and hopefully turn a profit. And with the tax assets the first couple billion or so that they did make would be tax free as well. Link to comment Share on other sites More sharing options...
Spekulatius Posted March 15, 2019 Share Posted March 15, 2019 Icahn having control of the company, especially when holding only 13% of the shares is a mixed bag. He usually makes sure that he gets to eat first.... Link to comment Share on other sites More sharing options...
aws Posted March 15, 2019 Share Posted March 15, 2019 Yeah I'd like to see him buying more stock since the stock is dramatically lower than his purchase price. Assuming he can, I heard there was a poison pill but I imagine that they could get rid of it now. It's funny I was just reading through the 10-k and the share repurchases caught my eye. It looked like nearly 5 million shares repurchased below $10 in the quarter which I thought was huge considering the 35 million or so outstanding. Then I realized that the 4,957 shares detailed was not omitting any zeroes, so literally 4,957 shares for like $45k. So used to seeing those things in thousands or millions. It's probably just a tax thing for employee stock awards, but still makes you wonder why they couldn't allocate any of their cash to buybacks with such a low price. Even just an authorization that they may not end up using would be nice. I can't imagine they have any restrictions on doing so with zero debt. Link to comment Share on other sites More sharing options...
meiroy Posted March 16, 2019 Share Posted March 16, 2019 Icahn having control of the company, especially when holding only 13% of the shares is a mixed bag. He usually makes sure that he gets to eat first.... That's an excellent point. Link to comment Share on other sites More sharing options...
meiroy Posted June 6, 2019 Share Posted June 6, 2019 I tried to calculate how much I'm down on this but it's beyond my arithmetics skills. Should have bought bitcoin. Link to comment Share on other sites More sharing options...
meiroy Posted June 13, 2019 Share Posted June 13, 2019 new 52w lows Link to comment Share on other sites More sharing options...
Sombunall Posted June 13, 2019 Share Posted June 13, 2019 Seems to me SD might've been something special: debt-free E&P that could've been run for cash flow and put up for sale... but instead it's starting to look like every other E&P -- spend more than cash flow, even if it means taking on debt, to develop assets and even acquire adjacent acreage... all to get production numbers up... If SD is a microcosm of how E&Ps are run, then the industry hasn't learned a thing in this bear market for energy. It's the same old same old... Having said all this, I'm pretty sure this post will market the bottom for SD. :P Link to comment Share on other sites More sharing options...
Gregmal Posted June 13, 2019 Share Posted June 13, 2019 The problem is that, management gets rewarded for bankrupting a company. Ward made a fortune crippling them. Then the next crew had every incentive because then they got a clean slate and tons of free stock. If a company goes bankrupt, senior management should mandatorily be fired. As long as it is the current way, file and get a big slug of free stock... things will never change. Link to comment Share on other sites More sharing options...
Liberty Posted June 13, 2019 Share Posted June 13, 2019 Seems to me SD might've been something special: debt-free E&P that could've been run for cash flow and put up for sale... but instead it's starting to look like every other E&P -- spend more than cash flow, even if it means taking on debt, to develop assets and even acquire adjacent acreage... all to get production numbers up... If SD is a microcosm of how E&Ps are run, then the industry hasn't learned a thing in this bear market for energy. It's the same old same old... "A scorpion asks a frog to carry it across a river. The frog hesitates, afraid of being stung by the scorpion, but the scorpion argues that if it did that, they would both drown. The frog considers this argument sensible and agrees to transport the scorpion. The scorpion climbs onto the frog's back and the frog begins to swim, but midway across the river, the scorpion stings the frog, dooming them both. The dying frog asks the scorpion why it stung the frog, to which the scorpion replies "I couldn't help it. It's in my nature."" Link to comment Share on other sites More sharing options...
meiroy Posted August 15, 2019 Share Posted August 15, 2019 Down almost 10% today. Soon I'll be about 50% down on this. Lovely. Link to comment Share on other sites More sharing options...
Gregmal Posted April 7, 2020 Share Posted April 7, 2020 If at first you dont succeed, try, try again. If you fail again, then what? Someone just needs to end this disaster of a company. Seems like just yesterday Icahn was going to save the day. Seems like just two yesterdays ago, Watsa, Cooperman, and Pickens found the value investment of the decade. Seems like last week Tom Ward was God. Link to comment Share on other sites More sharing options...
meiroy Posted April 7, 2020 Share Posted April 7, 2020 It was a small position for fun as I never touch anything in commodities/energy. Still holding on to it now which means it's down like maybe 90%? Link to comment Share on other sites More sharing options...
Gregmal Posted April 7, 2020 Share Posted April 7, 2020 Yea no swipe at anyone intended. Made the same misfortune myself many a years back on this one. This epitomizes investing in this space. Link to comment Share on other sites More sharing options...
jeffsreng Posted April 7, 2020 Share Posted April 7, 2020 It's nice to travel back memories lane: Link to comment Share on other sites More sharing options...
meiroy Posted April 7, 2020 Share Posted April 7, 2020 "The Company named Carl F. Giesler, Jr. as its President and Chief Executive Officer. Most recently, Mr. Giesler led the cost and operational turnaround and subsequent cash sale in January for Jones Energy, Inc. ("Jones Energy"). At Jones Energy, Mr. Giesler led a team that significantly right-sized that company's administrative and operating costs as well meaningfully improved its capital expenditure efficiency and effectiveness." Link to comment Share on other sites More sharing options...
ugadawg_98 Posted January 9, 2021 Share Posted January 9, 2021 "The Company named Carl F. Giesler, Jr. as its President and Chief Executive Officer. Most recently, Mr. Giesler led the cost and operational turnaround and subsequent cash sale in January for Jones Energy, Inc. ("Jones Energy"). At Jones Energy, Mr. Giesler led a team that significantly right-sized that company's administrative and operating costs as well meaningfully improved its capital expenditure efficiency and effectiveness." So far, so good. Link to comment Share on other sites More sharing options...
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