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For those of you that have 2013 leaps and are rolling over to 2014 are they in the money leaps? I have a number of 2.50 and 5.00 dollars leaps and plan on holding for awhile. Just curious if anyone had these calls. The new presentation looks good. This company is in such a better position than last spring when it hit 13.

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I have $5 calls, but the basis is higher at $4. I sold last years calls for a pretty nice gain, and bought these a bit later. They are underwater, but should hit par at some point this year. I bought 2014s at $3.5 and plan to hold those and trade out of the 2013s.

 

Ward is hard to follow, but is making the right decisions inmo. I like the presentation, like the plan to monetize less acreage (now down to 250k). Hopefully they issue long dated bonds  and continue to push out maturities. I would like for them to recall the 2016 9% bonds and issue new ones at 7.5%. I hope he continues to acquire assets at 2-3x CF, and continues selling acreage for dollars that he bought for pennies.

 

I am severely overweight SD, and look forward to a rally so I can get back to a normal position.

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  • 2 weeks later...

does this indicate that fairfax purchased approx 30 million shares (from 4 to 34 million) in 2012 (no sd activity in recent 13-F) at prices > $7/share????

 

is it possible that part of the 30 million are pfd conversions? if i remember correctly, the conversion rate was around $8......

 

regards

rijk

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correct, 13-F date is 31/12, that's how i deduct that the 30 million must have been purchased in 2012 at prices > $7......

 

based on below information (think there are more pfds outstanding with different terms) the conversion price is $10.86 and the latest conversion date would be dec 2014.....

 

regards

rijk

 

 

***

Private Placement of 6.0% Convertible Perpetual Preferred Stock. In December 2009, we completed a private placement of 2,000,000 shares of our 6.0% convertible perpetual preferred stock to an institutional investor in a transaction exempt from registration under Regulation D under the Securities Act. Net proceeds were approximately $199.9 million and were used to fund a portion of the Forest Acquisition purchase price and for general corporate purposes.

 

Each share of the 6.0% convertible perpetual preferred stock has a liquidation preference of $100.00 and is entitled to an annual dividend of $6.00 payable semi-annually in cash, common stock or any combination thereof, beginning on July 15, 2010. Additionally, each share is initially convertible into 9.21 shares of our common stock, at the holder’s option, at any time on or after February 1, 2010 based on an initial conversion price of $10.86 and subject to customary adjustments in certain circumstances. Five years after their issuance, all outstanding shares of the convertible preferred stock will be converted automatically into shares of our common stock at the then-prevailing conversion price as long as all dividends accrued at that time have been paid.

 

 

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thanks ffhmcnally,  think you are right, the filing also refers to december 31, 2011 as the "date of event which requires filing of this statement", i.e. if common shares would have been purchased in 2011, this would have shown in the most recent 13-F

 

regards

rijk

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Ya looks like I was just plain off. I even checked a few of the forms looking for info on the converts, but missed that note at the bottom. Interesting that he has enough to own 8% of the company after preferreds convert, but that will go down with the DOR acquisition. Does anyone know how many preferreds were owned. We know there were 4 million shares at year end.

 

Also if Prem does a transaction would he have to file? He owns over 5% on a converted basis, but not via common. I am not sure what the rules are in this situation.

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Can,t say I am impressed with price action going into earnings tomorrow. Perhaps negativity can lead to surprise and different action than last 2 quarters

 

I really think Mr. Market just doesn't know what to think, he doesn't know if he should like or hate the recent purchase of the offshore assets, he doesn't even know if he should like or hate the recent increase in global oil prices... Poor guy has all the symptoms of a nervous breakdown.

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Ya this is probably not the best horse to ride during this oil run up. Tom has really thrown Mr. Market for a loop, but I think he has made the right call by going offshore. Decent report, but  I want to hear about further monetizations. Also cant wait for the analyst day.

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but I think he has made the right call by going offshore.

 

I sure hope so. At the time of acquisition Ward was expecting the Dynamic acquisition to add at least hundreds of millions to free cash flow (at least that's my recollection), so if high oil prices are sustained, this might end up being a really good call because I don't think the added production carries the hedges that SD has in place right now.

But I really hope that nothing is lurking around the corner that they haven't thought about that can come and throw a wrench in their plans because at the end of the day, good projections or not, the acquisition was both dilutive and added to the already high debt in the short term. If all goes to plan and oil prices stay high then the added cash flow might prove valuable in financing drilling, paying down debt and improving their ratios across the board. We'll see.

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I am starting to think it wasnt dilutive . The extra $100 million in cash ( I think thats sand bagged, and think either it will be higher or they will be growing production at DOR) has allowed them to keep an additional 250,000 miss acres. I would prefer a sale for cash (I own leaps and have a time limit lol), but just about everyone with Miss land is saying its one of the best plays in the US.

 

When they sell or JV 250,000 acres, we can take that value and see what buying DOR allowed them to keep. The upside in the held Miss land may offset the dilution. Ward also may already be planning bolt on / tuck in acquisitions or may already have some DOR property that he plans to sell off. I am looking forward to the analyst day, and check the news / RSS each day. One day we will have a PR announcing the closing of the trust, and the next JV / asset sell. The stock will go up on that day.

 

Also WTI is at $108, but Brent is north of $120. DOR sells closer to Brent. Any tuck in small >$100 million dollar acquisitions at 2x last years cash flow (when oil was lower) will be quite nice.

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If you listen to the webcast of today's presentation, in the Q & A Ward talks about the Pinion being for sale as it is no longer key to SD. Hopefully he doesn't rush to sell the field as once nat gas pricing improves the field could be quite valuable.  i wonder if he is in talks with Oxy as they would seem to be the logical buyers?

 

cheers

Zorro

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