ourkid8 Posted December 9, 2014 Share Posted December 9, 2014 Yup, which is why i got out of ATPG with a 30ish percent loss. (Sandridge however is even worst!!!) I was just pointing out, this sector is outside my circle of competence. Tks, S 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...
thepupil Posted December 9, 2014 Share Posted December 9, 2014 know nothing about SD, but from here, there is little reason to own the equity unless you are very very bullish. you can move up the capital structure and make 17-18%YTM and 12.5% running yield at dollar prices in the high $50's to high $60's owning the HY bonds. Link to comment Share on other sites More sharing options...
ourkid8 Posted December 9, 2014 Share Posted December 9, 2014 Who knows. I do not think anyone with any kind of intelligence can predict the direction of Oil which is why i figured the hedges would support the price. Tks, S 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...
alertmeipp Posted December 9, 2014 Share Posted December 9, 2014 Who knows. I do not think anyone with any kind of intelligence can predict the direction of Oil which is why i figured the hedges would support the price. Tks, S 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? the problem is the hedge only goes out a year. And they need few years of strong growth to be self funded. At this pricing, they can't make money without the hedge. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 12, 2014 Share Posted December 12, 2014 they only have ~70% of their production hedged next year and about half of that is hedged with three-way collars that provide no protection below $75 per barrel. For a company that probably doesn't make money at $70 oil but needs to grow, this puts them in a very difficult situation next year. If I was them I would be repurchasing debt right now rather than producing un-hedged volumes for 2015. I think the company can survive given their cash and maturity profile, but they are going to face as much or more pain than almost anyone in the industry in 2015 based on what they need to do... in hindsight, you wonder why a company in a precarious financial position that claims to make plenty of money at $85-95 oil isn't fully hedged for the next few years... Link to comment Share on other sites More sharing options...
moustachio Posted December 13, 2014 Share Posted December 13, 2014 they only have ~70% of their production hedged next year and about half of that is hedged with three-way collars that provide no protection below $75 per barrel. For a company that probably doesn't make money at $70 oil but needs to grow, this puts them in a very difficult situation next year. If I was them I would be repurchasing debt right now rather than producing un-hedged volumes for 2015. I think the company can survive given their cash and maturity profile, but they are going to face as much or more pain than almost anyone in the industry in 2015 based on what they need to do... in hindsight, you wonder why a company in a precarious financial position that claims to make plenty of money at $85-95 oil isn't fully hedged for the next few years... SD, at least right now, seems like a bet on oil prices not going down further. I wouldn't like to make that bet. Ourch. With that hedging, oil price is probably going to hurt them big time next year. In the latest quarter they had 140 mil cash flow, 62 mil in interest expense, and 326 mil in cap ex. If you end up with low oil prices, then they might be racking up debt while cash flow decreases or stays the same... all to increase production that might not even be economical at future prices. Unless I misunderstood the way it is written, this morning star report says their break even is at $94 oil... we might not see that average price again for years: http://analysisreport.morningstar.com/stock/research?t=SD®ion=USA&culture=en-US&productcode=MLE Link to comment Share on other sites More sharing options...
moustachio Posted December 13, 2014 Share Posted December 13, 2014 http://www.bloomberg.com/news/2014-11-20/oil-at-75-means-patches-of-texas-shale-turn-unprofitable.html By reining in drilling costs, SandRidge makes a 40 percent return on a $2.9 million well at $80 a barrel, said Jeff Wilson, a company spokesman. That’s about 14 percent cheaper than the BNEF data’s estimated well cost and doesn’t include other expenses such as leases and transportation. Including infrastructure, the return is 30 percent, Wilson said. SandRidge also hedged the majority of its 2015 production above $90 a barrel, he said. Shares of SandRidge fell 7.6 percent to $3.83 since Oct. 1. I guess it depends on who you believe. This looks better, but with oil below 75 and factoring in the cost of debt... still really bad. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 13, 2014 Share Posted December 13, 2014 SD is unquestionably in a lot of trouble in the short term, but given the timing of their debt maturities and the current liquidity the company has, I don't think the survival of the company is in question right now. I've never been a fan of this company or the Miss Lime, but it seems like they have gotten their costs down to a level that the wells probably do make money at $80 oil and possibly lower. I believe that lower oil prices in the short term (6-18 months) almost guarantee higher oil prices in the longer term (3-5 years). Given this, I think SD equity could be an attractive way to make a levered bet on higher long-term oil prices. Link to comment Share on other sites More sharing options...
Ham Hockers Posted December 15, 2014 Share Posted December 15, 2014 I don't think the survival of the company is in question right now. 7.5% bonds trading sub-60 would disagree with you. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 15, 2014 Share Posted December 15, 2014 I don't think the survival of the company is in question right now. 7.5% bonds trading sub-60 would disagree with you. If these bonds were coming due in the next year or two, I would agree with you. However, in this case, I believe these bonds reflect just how unattractive it is to make a long-term bet on marginal oil production and what the required rate of return is. An investor can easily get a 20% IRR investing in any number of well-capitalized large oil companies right now if oil returns to $90 per Bbl in the next few years. I think the price of these bonds is a reflection of that reality, not a reflection that the enterprise value of the company has fallen to just 60% of the value of the debt. This company surviving to 2021 is absolutely in doubt right now, but survival for the next few years (which the equity price seems to reflect some doubt on) looks assured. Link to comment Share on other sites More sharing options...
A_Hamilton Posted December 15, 2014 Share Posted December 15, 2014 I don't think the survival of the company is in question right now. 7.5% bonds trading sub-60 would disagree with you. If these bonds were coming due in the next year or two, I would agree with you. However, in this case, I believe these bonds reflect just how unattractive it is to make a long-term bet on marginal oil production and what the required rate of return is. An investor can easily get a 20% IRR investing in any number of well-capitalized large oil companies right now if oil returns to $90 per Bbl in the next few years. I think the price of these bonds is a reflection of that reality, not a reflection that the enterprise value of the company has fallen to just 60% of the value of the debt. This company surviving to 2021 is absolutely in doubt right now, but survival for the next few years (which the equity price seems to reflect some doubt on) looks assured. Disagree. These are also unsecured bonds so discount reflects the likelihood that in a recap you are going to be subordinated. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 15, 2014 Share Posted December 15, 2014 I don't think the survival of the company is in question right now. 7.5% bonds trading sub-60 would disagree with you. If these bonds were coming due in the next year or two, I would agree with you. However, in this case, I believe these bonds reflect just how unattractive it is to make a long-term bet on marginal oil production and what the required rate of return is. An investor can easily get a 20% IRR investing in any number of well-capitalized large oil companies right now if oil returns to $90 per Bbl in the next few years. I think the price of these bonds is a reflection of that reality, not a reflection that the enterprise value of the company has fallen to just 60% of the value of the debt. This company surviving to 2021 is absolutely in doubt right now, but survival for the next few years (which the equity price seems to reflect some doubt on) looks assured. Disagree. These are also unsecured bonds so discount reflects the likelihood that in a recap you are going to be subordinated. Good point on subordination. Either way, I wouldn't want to own these bonds because if oil prices recover in a year or two, the equity will do better, and if it takes longer than that, you probably don't want to be involved. I think the price reflects this reality (and I agree that if prices don't rise in a year or two, subordination becomes one of the major issues to fear). If SD had two year debt at 5%, I would be a buyer at $80 right now. Link to comment Share on other sites More sharing options...
A_Hamilton Posted December 15, 2014 Share Posted December 15, 2014 I'm seeing "Asks" on SD 2/15/2023 7.5's due 2023 at 56. Bids are at least 2 points away. Ouch. Link to comment Share on other sites More sharing options...
T-bone1 Posted December 18, 2014 Share Posted December 18, 2014 Looking a lot less interesting after TPG-Axon sold a lot of stock at the lows... Link to comment Share on other sites More sharing options...
kfh227 Posted December 19, 2014 Share Posted December 19, 2014 I'll be gambling on Jan 1 (OK, Jan 2 as markets are closed on Jan 1) if SD stays low. I'll be buying super cheap out of the money calls to Jan 2015. The strike is TBD but throwing a couple bucks at these can result in a 20x or greater gain if the stock goes up 3x. Actuallly, I'll be doing a bucket of a few O&G stocks with this strategy. When stocks get killed, people usually shy away from calls. Even a quick run up to $5 would shoot premiums on calls up as investors gain confidence. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 19, 2014 Share Posted December 19, 2014 Looking a lot less interesting after TPG-Axon sold a lot of stock at the lows... Wonder how Tom is doing now with his money. Link to comment Share on other sites More sharing options...
alertmeipp Posted December 21, 2014 Share Posted December 21, 2014 Is Prem Looking a lot less interesting after TPG-Axon sold a lot of stock at the lows... Is Prem still in this? FFH were 6% holder in both SD and XCO, I wonder what they are doing with their positions. Link to comment Share on other sites More sharing options...
compoundinglife Posted December 21, 2014 Share Posted December 21, 2014 Cooperman adding Atlas not adding to Sandridge position: http://finance.yahoo.com/video/cooperman-adding-atlas-energy-not-174500436.html Link to comment Share on other sites More sharing options...
alertmeipp Posted December 21, 2014 Share Posted December 21, 2014 Cooperman adding Atlas not adding to Sandridge position: http://finance.yahoo.com/video/cooperman-adding-atlas-energy-not-174500436.html Sandridge is in tough position, pretty much all in in one play and they are the biggest player there. They probably spent most of their buyback money and all those insider buy are losing 50% in few short weeks. Looking back, they probably should use the money to buy back their debt. Link to comment Share on other sites More sharing options...
ourkid8 Posted December 23, 2014 Share Posted December 23, 2014 http://finance.yahoo.com/news/sandridge-energy-inc-announces-mandatory-223500728.html SandRidge Energy, Inc. Announces Mandatory Conversion of $200 Million 6.0% Convertible Perpetual Preferred Stock Link to comment Share on other sites More sharing options...
Txvestor Posted December 23, 2014 Share Posted December 23, 2014 As can be expected. $200 million gained(in 2009), 18.5 million shares issued in return. If they could issue a lot more shares at 10.56 i'm sure they would, and if shares were north of $10, i'm sure most folks on this thread would be thrilled. Link to comment Share on other sites More sharing options...
compoundinglife Posted December 23, 2014 Share Posted December 23, 2014 As can be expected. $200 million gained(in 2009), 18.5 million shares issued in return. If they could issue a lot more shares at 10.56 i'm sure they would, and if shares were north of $10, i'm sure most folks on this thread would be thrilled. Yeah, these were scheduled for mandority conversion at the beginning of this month. AFAIK none of the prefs have a cumulative dividend and some of the divs can be paid in common stock. Some were just declared recently but I would not be surprised and I would hope given the conditions that they suspend pref divs for the post Feb payment period. Link to comment Share on other sites More sharing options...
undervalued Posted January 8, 2015 Share Posted January 8, 2015 Latest 10Q is out.. along with the amended Quarter reports.. http://www.sec.gov/Archives/edgar/data/1349436/000134943615000031/0001349436-15-000031-index.htm Link to comment Share on other sites More sharing options...
undervalued Posted January 8, 2015 Share Posted January 8, 2015 In September 2014, the Company’s Board of Directors approved a share repurchase program under which the Company can repurchase up to $200.0 million of the Company’s common stock. Under the program’s terms, shares may be repurchased on the open market, through privately negotiated transactions such as block trades, or by other means as determined by SandRidge’s management and in accordance with the requirements of the Securities and Exchange Commission. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, and other conditions. There is no fixed termination date for this repurchase program, and the repurchase program may be suspended or discontinued at any time. Payment for shares repurchased under the program will be funded using the Company's working capital. During the three-month period ended September 30, 2014, 3,500,000 shares totaling $17.5 million were repurchased under the program at prices equivalent to the then current market price and immediately retired. As the Company had an accumulated deficit balance during the third quarter of 2014, the excess of the repurchase price over the par value was fully applied to additional paid-in capital. I guess they can still purchase a lot of stocks at this price since they've only spent $17.5 mil. Link to comment Share on other sites More sharing options...
thefatbaboon Posted January 8, 2015 Share Posted January 8, 2015 There was a lot of time to buy at around $4 in Oct and Nov. Link to comment Share on other sites More sharing options...
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