thefatbaboon Posted November 28, 2014 Share Posted November 28, 2014 Yes. Best time to sell was when tpg was first involved. What a nightmare. They can't make money when hedge is off at this price. It's incredible really - what a miserable investment this has been so far. I bet they used up their $200m buyback capacity a couple days ago. Link to comment Share on other sites More sharing options...
alertmeipp Posted November 28, 2014 Share Posted November 28, 2014 Sanj, u still in this one? What's ur thought? Link to comment Share on other sites More sharing options...
bmichaud Posted November 29, 2014 Share Posted November 29, 2014 Wow Link to comment Share on other sites More sharing options...
Vish_ram Posted November 29, 2014 Share Posted November 29, 2014 With the exception of 70's oil embargo, in the last century the WTI oil price was mostly below $40 (inflation adjusted). This was in a period of great Western growth, Japan's rise from ashes, two world wars and their senseless destruction and rebuilding, etc With all the advances in solar, tar sands, fracking, electric cars etc, what are the chances of oil setting at $50 or below? I'm wondering if once in a century 2004-2010 oil price increase has caused the greatest misallocation of capital. The electric car revolution is hardly in the 1st innings. My SD long position is looking not too bright. Link to comment Share on other sites More sharing options...
plato1976 Posted November 29, 2014 Share Posted November 29, 2014 I have been reading oil related materials these days I had a small position in SD which I converted into a PWE position one month ago. Anyway I lost near 40% on this position from the very beginning Now I am seriously thinking about increasing the port weight in the oil&gas sector But I have quite some confusion after reading all these materials On one hand there are data showing the solar cost will be competitive against oil/gas in 2-3 years, on the other hand Grantham etc. are claiming that renewal energy need a few decades to be a major energy source. I am not too concerned about these short term fluctuation. Looks like the shale revolution by itself won't solve the oil problem in the long run. These shale companies have very economics actually, so far. However, in the long run, solar/electric car etc. may have the potential to bring down the oil price permanently. The question is how soon. With the exception of 70's oil embargo, in the last century the WTI oil price was mostly below $40 (inflation adjusted). This was in a period of great Western growth, Japan's rise from ashes, two world wars and their senseless destruction and rebuilding, etc With all the advances in solar, tar sands, fracking, electric cars etc, what are the chances of oil setting at $50 or below? I'm wondering if once in a century 2004-2010 oil price increase has caused the greatest misallocation of capital. The electric car revolution is hardly in the 1st innings. My SD long position is looking not too bright. Link to comment Share on other sites More sharing options...
thefatbaboon Posted November 29, 2014 Share Posted November 29, 2014 Similar story here, bought small position couple years ago, it's now worth half. Never increased it, and have no interest in increasing it or any other investment in O&G. Should have sold SD anywhere between $5 and $7 but position is so small that I kept coming up with speculative reasons to hold. This is just not my area, I hate everything about it: the charts, colored maps, abbreviations, the macro bull about energy, and the incredible scope for management delusion and misdirection. I keep coming back to one simple realization: I have no idea what's in these holes or what they're worth. I should really sell my little position but, being stupid, I'll probably come up with some dumb reason to keep it. Until then it's ugly red face on my statement will hopefully inspire me to be more disciplined! Link to comment Share on other sites More sharing options...
PhatKing Posted November 29, 2014 Share Posted November 29, 2014 Yes, Sandridge was a mistake, as it had two things that made it a potent risk: 1) No oil company controls the price of its products - somebody else does ... OPEC wars etc... If Sandridge wants to raise prices, it cannot. 2) Debt- leverage etc.... which has been the downfall of many-a-company. The following is a transcript from a Sequoia Fund meeting in 2010 (that I had attended, and learnt the hazards of investing in oil companies) Q: What are your views on gold and energy? Greg Alexander: On energy I'd give the same answer I gave a few years ago. Which is it's a good business; we spend time on it. At least three or four people here have written internal reports on energy companies within the last six months. There are some wonderful companies. We own a few shares of Canadian National Resources, which is a very smart company run out of Canada by Murray Edwards. But in general we don't know what the price is going to be of oil and gas. So sort of like with gold, we just don't know what the price will be, we don't really know how to forecast it. So there tend to be people who have firmer opinions than we do about what the price of oil and gas will be. Therefore, they end up being willing to pay more for the shares than we are. There is a good saying in the oil and gas business that the cure for high prices is high prices, and the cure for low prices is low prices. Learn what you will from the above comment. I did. In general, investing in companies that are heavily levered, and have a hard time setting prices is speculation, not investing. Link to comment Share on other sites More sharing options...
kfh227 Posted December 1, 2014 Share Posted December 1, 2014 Worried about solar and electric? About 75% of the 6.79 billion barrels of petroleum used in the US in 2012 were gasoline, heating oil/diesel fuel, and jet fuel. About 10% of that is used by passenger cars. There is no way that electric is going to pentrate the airline, trucking and railroad industry any time soon. Even the heating oil in our home will probably be heating oil 20 years from now. The transition does need to happen for reasons that have nothing to do with economics. But there is no way it will happen quickly. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 1, 2014 Share Posted December 1, 2014 So back to Sandridge.. what are u guys doing with it? Link to comment Share on other sites More sharing options...
treasurehunt Posted December 1, 2014 Share Posted December 1, 2014 About 75% of the 6.79 billion barrels of petroleum used in the US in 2012 were gasoline, heating oil/diesel fuel, and jet fuel. About 10% of that is used by passenger cars. Do you have a source for the claim that passenger cars use less than 10% of the total petroleum usage in the US? My recollection is that cars account for around 50%. According to the following page, 46% of US petroleum consumption in 2013 was in the form of gasoline: http://www.eia.gov/tools/faqs/faq.cfm?id=41&t=6. I believe most of the gasoline is used by passenger cars, since trucks and trains typically use diesel. Data for vehicle miles traveled indicates that gasoline consumption by passenger cars is well over 100 billion gallons per year: http://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/national_transportation_statistics/html/table_01_40.html Link to comment Share on other sites More sharing options...
ourkid8 Posted December 1, 2014 Share Posted December 1, 2014 I am really not sure. I hope the share repurshare authorization is not exhausted and management is able to repurchase shares at the current price. TPG, Omega and Fairfax need to look at options right now. I don't understand how the hedges are not helping the price - this year at $92 and next year we are hedged at $90/share. 1. Sell the company in an all stock transaction at a fair price $6-7 as there is no way we will get the $13-15/share management believes it is worth - very unfortunate 2. Managemen should cut capex dramatically and just repurchase stock This is probably my last O&G investment as this is #2 I got burned on. I really don't understand the sector at all. Tks, S So back to Sandridge.. what are u guys doing with it? Link to comment Share on other sites More sharing options...
Philip Morris IV Posted December 1, 2014 Share Posted December 1, 2014 For what it's worth, Riverstone/Carlyle and Mount Kellett are also still holding on with 10% and 5% of SO respectively. Tune in for this week's episode of Cloning Gone Wrong. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 1, 2014 Share Posted December 1, 2014 At this rate, we will see 1s this tomorrow. Brutal. Link to comment Share on other sites More sharing options...
Picasso Posted December 1, 2014 Share Posted December 1, 2014 Anyone looked at the debt on SD? Link to comment Share on other sites More sharing options...
alertmeipp Posted December 1, 2014 Share Posted December 1, 2014 >>Anyone looked at the debt on SD? 70 cents on a dollar. Link to comment Share on other sites More sharing options...
plato1976 Posted December 1, 2014 Share Posted December 1, 2014 SD vs PWE who has higher cost currently? PWE's cost shouldn't be that bad if it continues to shed non-core assets, but the problem is they can no longer do it in this env. They were lucky to sell 335M just before the crash At this rate, we will see 1s this tomorrow. Brutal. Link to comment Share on other sites More sharing options...
fareastwarriors Posted December 1, 2014 Share Posted December 1, 2014 >>Anyone looked at the debt on SD? 70 cents on a dollar. what about the preferred stock? Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 1, 2014 Share Posted December 1, 2014 For what it's worth, Riverstone/Carlyle and Mount Kellett are also still holding on with 10% and 5% of SO respectively. Tune in for this week's episode of Cloning Gone Wrong. Mount Kellett got killed on Baja Mining. I wrote about Baja on my blog. I wouldn't clone them. Link to comment Share on other sites More sharing options...
AzCactus Posted December 8, 2014 Share Posted December 8, 2014 I wasn't able to find a thread on Sandridge. According to the last 13f for FFH this is about 9.5% of their portfolio. I have not researched this company in much depth at all, but it sure looks like they have about $1.85 in cash and are selling at $2.10. Does anyone know this company well and have any opinion about its long term prospects? David Link to comment Share on other sites More sharing options...
valueinvesting101 Posted December 8, 2014 Share Posted December 8, 2014 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sd-sandridge-energy/ 160 pages and counting... Link to comment Share on other sites More sharing options...
AzCactus Posted December 8, 2014 Share Posted December 8, 2014 http://www.cornerofberkshireandfairfax.ca/forum/investment-ideas/sd-sandridge-energy/ 160 pages and counting... Thanks Valueinvesting--my mistake. Link to comment Share on other sites More sharing options...
jwelborn93 Posted December 8, 2014 Share Posted December 8, 2014 Does anyone have an opinion on the preferred (SDRXP) right now? It's trading at 50 cents on the dollar with a yield of almost 17%. The company can't force the conversion to common anytime soon as the common would have to have traded above ~$10.4 for 20 out of 30 consecutive trading days. I haven't held SD common, but am looking at possibly getting into it now. Any suggestions on how to structure this in conjunction with the preferred? Link to comment Share on other sites More sharing options...
ourkid8 Posted December 9, 2014 Share Posted December 9, 2014 Can someone help me understand how Sandridge is $2.10/share with a $1B market cap considering the majority of its production is hedged at $90 until the end of 2015? There is also no debt coming due until 2020!!! I am in absolute disbelief. I have lost money on 2 investments - 1. ATPG and now 2. SD (I have now added all O&G names in my too hard to understand pile) Link to comment Share on other sites More sharing options...
ItsAValueTrap Posted December 9, 2014 Share Posted December 9, 2014 Can someone help me understand how Sandridge is $2.10/share with a $1B market cap considering the majority of its production is hedged at $90 until the end of 2015? There is also no debt coming due until 2020!!! I am in absolute disbelief. I have lost money on 2 investments - 1. ATPG and now 2. SD (I have now added all O&G names in my too hard to understand pile) Wasn't it obvious in hindsight that ATPG inflated the economics of its reserves? Link to comment Share on other sites More sharing options...
alertmeipp Posted December 9, 2014 Share Posted December 9, 2014 Can someone help me understand how Sandridge is $2.10/share with a $1B market cap considering the majority of its production is hedged at $90 until the end of 2015? There is also no debt coming due until 2020!!! I am in absolute disbelief. I have lost money on 2 investments - 1. ATPG and now 2. SD (I have now added all O&G names in my too hard to understand pile) What do u think oil will go when they hedge run off? Link to comment Share on other sites More sharing options...
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