tombgrt Posted October 2, 2011 Share Posted October 2, 2011 I have read about SD a bit yesterday as I became interested because of the share price plunge. As far as I understand, Ward is upping capex because he is seeing tremendous value (2nd missi play etc.) while the company is already indebted big time. What do people here view as estimates of total asset value? When is he going to shift his focus to growing cash flow instead of raising assets? I saw that he had a 3-year plan but why doesn't he sell off more of the natural gaz assets at depressed prices and more of the first missi play. Losing some upside but providing in more solvability in current scary times doesn't look that bad to me? What will keep Ward from further upping capex in 2012 and beyond and not getting out of the debt mess? What are the arguments for some people to buy leaps in an already leveraged company in the current environment? Is it an all or nothing bet anyway where you better bet the farm? Just some thoughts/concerns and I would be very grateful if someone could shed some light on it. Link to comment Share on other sites More sharing options...
Myth465 Posted October 2, 2011 Share Posted October 2, 2011 l will give it a go. 1. As far as I understand, Ward is upping capex because he is seeing tremendous value (2nd missi play etc.) while the company is already indebted big time. What do people here view as estimates of total asset value? This is a tough one, depends on long term oil and gas prices. They view total asset value at $36 after debt is taken into account. That was with $100 WTI and $5 gas I think. Thats after everything is developed. Obviously you wouldnt pay that much, and its for sure gone down with $80 oil and $4 gas. I believe Oil and Gas will go up over the long term, but we could see any price now. 2. When is he going to shift his focus to growing cash flow instead of raising assets? - End of 2014 they will be self funding, at least thats the plan. 3. I saw that he had a 3-year plan but why doesn't he sell off more of the natural gaz assets at depressed prices and more of the first missi play. Losing some upside but providing in more solvability in current scary times doesn't look that bad to me? - Basically the JV came out of no where. They raised $250 mill in cash and $250 n carries. Next they used that to buy the old miss. The goal is to hold as much as the old and new miss as possible, and then do infill drilling once its HBP. Selling the natural gas is a bad idea, they have the Pinion field locked up data wise, and also have a huge CO2 plant there. Companies like Oxy need the CEO for enhanced oil recovery, so its not exactly a pure natural gas play. SD is doing some drilling in the field to see exactly what they have, and in the meantime selling non core assets / gas. Soon Gulf inmo will be sold, and we will see a sell / JV in the Pinion once they have a full understanding of whats there. 3. What will keep Ward from further upping capex in 2012 and beyond and not getting out of the debt mess? - The market / drop in oil prices. I like upping capex. SD would be foolish to stop drilling, and pay down debt. Production would noise dive, and they would lose a bunch of land due to it not being HBP. I prefer the all in strategy given the situation. Also no real new debt has been added, yet. Debt will come in 2013 towards teh end, and by then we should know where things are going. Better to ramp up production and grow into debt. 4. What are the arguments for some people to buy leaps in an already leveraged company in the current environment? Is it an all or nothing bet anyway where you better bet the farm? - Leaps go both ways, you could go all in or nothing as I may end up doing, or could buy a 3% position, and if SD goes to $13 by 2014 you are up 355%...... Just some thoughts/concerns and I would be very grateful if someone could shed some light on it. - Let me know if you have any questions. Bottom line in my opinion, if you are long term bullish on oil and gas - SD and CHK are one of the best ways to play the turn. If you want to throw time into the mix or limit your position consider using leaps. Link to comment Share on other sites More sharing options...
tombgrt Posted October 2, 2011 Share Posted October 2, 2011 Thanks a lot Myth, your post is of tremendous value and definitely gives me a quicker overview than I could find myself in half a day. ;) I'm going to look into it further when I find some time, thanks again. :) Link to comment Share on other sites More sharing options...
ourkid8 Posted October 3, 2011 Share Posted October 3, 2011 Has the market made you an offer you cannot refuse yet? I am at my offer price but I still did not pull the trigger yet... this is unbelievable how this stock is selling off at this leve. S ourkid8 thats what I decided last month or so. At some point the market will make me an offer I cant refuse, until then I am just watching. Link to comment Share on other sites More sharing options...
Myth465 Posted October 3, 2011 Share Posted October 3, 2011 No. Its close. I have decided that we could see any price. Even $2, and no longer get excited by 10% moves lol. Basically if the market or WTI moves 2%-3% we will move more, maybe 2 - 3 x more. I think the market has more to go, but not sure about us. Eventually you run out of room lol. If I had no position here, I would buy 10% - 15% of a full position. I am severally overweight oil and gas, and am looking to expand my position and take loses. We could see $50 oil, so I am waiting until some sort of bottom. If I miss it not bad, I have more than enough. I will buy tomorrow though if Tom Ward pulls off another transaction in this market, not sure if trusts will be marketable. I have a stock yielding 14% in my portfolio. Link to comment Share on other sites More sharing options...
AZ_Value Posted October 3, 2011 Share Posted October 3, 2011 l will give it a go. 1. As far as I understand, Ward is upping capex because he is seeing tremendous value (2nd missi play etc.) while the company is already indebted big time. What do people here view as estimates of total asset value? This is a tough one, depends on long term oil and gas prices. They view total asset value at $36 after debt is taken into account. That was with $100 WTI and $5 gas I think. Thats after everything is developed. Obviously you wouldnt pay that much, and its for sure gone down with $80 oil and $4 gas. I believe Oil and Gas will go up over the long term, but we could see any price now. 2. When is he going to shift his focus to growing cash flow instead of raising assets? - End of 2014 they will be self funding, at least thats the plan. 3. I saw that he had a 3-year plan but why doesn't he sell off more of the natural gaz assets at depressed prices and more of the first missi play. Losing some upside but providing in more solvability in current scary times doesn't look that bad to me? - Basically the JV came out of no where. They raised $250 mill in cash and $250 n carries. Next they used that to buy the old miss. The goal is to hold as much as the old and new miss as possible, and then do infill drilling once its HBP. Selling the natural gas is a bad idea, they have the Pinion field locked up data wise, and also have a huge CO2 plant there. Companies like Oxy need the CEO for enhanced oil recovery, so its not exactly a pure natural gas play. SD is doing some drilling in the field to see exactly what they have, and in the meantime selling non core assets / gas. Soon Gulf inmo will be sold, and we will see a sell / JV in the Pinion once they have a full understanding of whats there. 3. What will keep Ward from further upping capex in 2012 and beyond and not getting out of the debt mess? - The market / drop in oil prices. I like upping capex. SD would be foolish to stop drilling, and pay down debt. Production would noise dive, and they would lose a bunch of land due to it not being HBP. I prefer the all in strategy given the situation. Also no real new debt has been added, yet. Debt will come in 2013 towards teh end, and by then we should know where things are going. Better to ramp up production and grow into debt. 4. What are the arguments for some people to buy leaps in an already leveraged company in the current environment? Is it an all or nothing bet anyway where you better bet the farm? - Leaps go both ways, you could go all in or nothing as I may end up doing, or could buy a 3% position, and if SD goes to $13 by 2014 you are up 355%...... Just some thoughts/concerns and I would be very grateful if someone could shed some light on it. - Let me know if you have any questions. Bottom line in my opinion, if you are long term bullish on oil and gas - SD and CHK are one of the best ways to play the turn. If you want to throw time into the mix or limit your position consider using leaps. Nice summary Myth, 3. What will keep Ward from further upping capex in 2012 and beyond and not getting out of the debt mess? - The market / drop in oil prices. I like upping capex. SD would be foolish to stop drilling, and pay down debt. Production would noise dive, and they would lose a bunch of land due to it not being HBP. I prefer the all in strategy given the situation. Also no real new debt has been added, yet. Debt will come in 2013 towards teh end, and by then we should know where things are going. Better to ramp up production and grow into debt. Also the underlying point here is that it would definitely be crazy to stop drilling given that they have locked in revenues above or around $90 through hedges (i can't remember the exact % but I think Ward said more than 80% of their production was hedged at high prices) so even if the economy falters and oil drops to $30, it still wouldn't make sense for them to stop drilling unless you think that it will drop and stay there until 2016. Their upping production is part of their strategy to be self funded in a few years as the guaranteed revenue is as important as the JVs and trusts Ward has been signing to clean up their financial standing. But I think that ultimately with a highly leveraged company with an ambitious plan like SD, it has to be a bet on management to keep delivering on their promises and they haven't disappointed so far, to me the fact that Watsa and the Fairfax team went all in with Ward was the vote of confidence I needed, and I wouldn't be surpised if they were back to buying right now. But if you pick up their proxy don't spend too much time on his compensation for your own sake lol... Dude sure pays himself a lot of money. Link to comment Share on other sites More sharing options...
Myth465 Posted October 5, 2011 Share Posted October 5, 2011 Great presentation. Ward touches on just about everything. Where are those 2014 leaps .... http://wsw.com/webcast/jr12/sd/ I like the you didnt like Arena, didnt like Forest, didnt like the switch to oil, didnt like the Old Miss, and you will be thanking me for the new miss when thats all done... Link to comment Share on other sites More sharing options...
AZ_Value Posted October 13, 2011 Share Posted October 13, 2011 http://investors.sandridgeenergy.com/phoenix.zhtml?c=196066&p=irol-SECText&TEXT=aHR0cDovL2lyLmludC53ZXN0bGF3YnVzaW5lc3MuY29tL2RvY3VtZW50L3YxLzAwMDExOTMxMjUtMTEtMjcwMjYzL3htbA%3d%3d Asset sale that we've been thinking was around the corner. Link to comment Share on other sites More sharing options...
AZ_Value Posted October 13, 2011 Share Posted October 13, 2011 Great presentation. Ward touches on just about everything. Where are those 2014 leaps .... http://wsw.com/webcast/jr12/sd/ I like the you didnt like Arena, didnt like Forest, didnt like the switch to oil, didnt like the Old Miss, and you will be thanking me for the new miss when thats all done... Great presentation. He does seem more combative than usual, he's probably getting tired of people doubting his assets acquisitions even though they've all delivered so far and also doubting his hedging. I notice at the beginning of the presentation he briefly says "we just sold our East Texas asset" I didn't know until the 8-K today, but then again it was expected. Link to comment Share on other sites More sharing options...
AZ_Value Posted October 14, 2011 Share Posted October 14, 2011 Where are those 2014 leaps .... I think SD is in Cycle 3 and 2014 LEAPS will be listed on November 14 http://www.888options.com/help/faq/leaps.jsp#5 Link to comment Share on other sites More sharing options...
Myth465 Posted October 17, 2011 Share Posted October 17, 2011 Thanks for all the links AZ. I am really growing to like this company and can see holding a smaller core position for quite a while. I hope to push out my $5 leaps to 2014 then to exercise the ones in my taxable account by then should things go as planned. I will trade the ones in my Roth depending on the situation. I am starting to understand Lampert more and more, and why he holds companies for so long. Good catch on the East Texas, didnt hear that in the presentation. He is selling assets which no one is assigning value to for $250 million each time. It will be interesting to see what happens in the Pinion / WTO. Ward has done a good number of transactions each quarter so I dont expect Q4 to be a quiet one. Time to throw out more predictions. Some of these are more like throwing darts. Ward buys more than 1 million acres in the New Miss / or starts another play which angers shareholders. We see a JV or Asset sell in the New Miss which provides seed capital for the first 50 wells or so, this will be followed by other sells / JV. This new miss will fund itself and provide a very high ROR on its initial seed capital. Eventually it will fund another play, this will be how he avoids angering share holders going forward. He will essentially divide the company into 2 companies. A production company which has targets, funding, and metrics which are hit - and an Exploration company which was started with $250 million dollars, grows into a multi billion dollar company, and is entirely self funded. Perhaps it will return the seed capital back to company 1. This is what I would do, and it would allow him to continue the model CHK had without annoying the hell out of shareholders. Ward does 1-2 more trusts. 1 in the Old Miss, and 1 perhaps in the Permian. These will be done much quicker to prevent what happened during the Trust 2 marketing. Something happens in the WTO - Sale or more likely JV. We just cant drill here, and we have contracts to deliver CO2 which helps many companies and perhaps us in the Permian. Nothing involving debt or shares happens, with the exception of perhaps lowering rates / pushing out maturities. Thats all I have for now. Link to comment Share on other sites More sharing options...
alertmeipp Posted October 19, 2011 Share Posted October 19, 2011 With their assets, oil productions and growth rate, I would be surprised if they are not getting calls for M&A opportunities. This one will be money good just not sure if my options will. Link to comment Share on other sites More sharing options...
AZ_Value Posted October 21, 2011 Share Posted October 21, 2011 Crap! Our guy made the list @ number 2. Lol... Well, it's never been a secret that we're paying him a boat load of money. http://247wallst.com/2011/10/20/america%e2%80%99s-most-overpaid-ceos/3/ Link to comment Share on other sites More sharing options...
alertmeipp Posted October 21, 2011 Share Posted October 21, 2011 yeah... it's fine as long as he delivers. He executes well so far. Link to comment Share on other sites More sharing options...
Myth465 Posted October 22, 2011 Share Posted October 22, 2011 I make it a point not to read the proxy statement :D. Honestly he has created value from where I bought the stock, but it sucks for anyone who got in at $30 - $60. Link to comment Share on other sites More sharing options...
Zorrofan Posted November 3, 2011 Share Posted November 3, 2011 Third quarter results out.... http://investors.sandridgeenergy.com/phoenix.zhtml?c=196066&p=irol-newsArticle&ID=1626102&highlight= Cheers Zorro Link to comment Share on other sites More sharing options...
alertmeipp Posted November 3, 2011 Share Posted November 3, 2011 hmmm.. down a bit after hours. I guess people don't like the fact that they lower than production guidance which they upped August. New Miss play up to 700k. Soon, we may have a new trust IPO every quarter or so. Link to comment Share on other sites More sharing options...
alertmeipp Posted November 5, 2011 Share Posted November 5, 2011 Listened to the CC, nothing new except about possible improvement of drill sizing. The equipment bottleneck will be solved as they shift the right to Miss. Will tell us more about new play by end year when they load up. Hope EU doesn't blow up - home run in making. Link to comment Share on other sites More sharing options...
gordoffh Posted November 5, 2011 Share Posted November 5, 2011 thought this was a pretty telling analysis from another board from CC quote tom ward "Our company has developed and dominates 2 of the most capital-efficient projects in the U.S. today. In the Miss, each time we drill a well and spend $3 million, we create a net present value of an additional $4.9 million. And in the Central Basin Platform, when we spend $760,000, we create $1 million of net present value. I'm very proud that we have taken the route of high-quality reservoirs at shallow depths with scalable plays, where cost can be controlled." Here's a back of the envelope calculation of expected stock price appreciation for 2012 based on Ward's statements regarding the additional NPV for each well drilled. 28 rigs in the Miss 1 and 12 rigs in the Per in 2012 It takes 21 days to drill a well from past presentations So for 2012 additional NPV is estimated to be (365/21)*((28*$4.9M)+(12*$1M)) = $2,593M which is approximately $5 per share expected appreciation during 2012 Link to comment Share on other sites More sharing options...
AZ_Value Posted November 19, 2011 Share Posted November 19, 2011 Poor Charlie posted the link below about Ward in the CHK thread and I thought it was a good read Interesting article about Aubrey from Forbes Oct issue: http://www.forbes.com/forbes/2011/1024/feature-aubrey-mcclendon-hero-energy-chesapeake-risk-christopher-helman.html Also for those following Sandridge: http://findarticles.com/p/articles/mi_qn4182/is_20070108/ai_n17108190/ Link to comment Share on other sites More sharing options...
abcd Posted December 22, 2011 Share Posted December 22, 2011 http://www.marketwatch.com/story/sandridge-energy-inc-announces-1-billion-mississippian-joint-venture-2011-12-22 Link to comment Share on other sites More sharing options...
alertmeipp Posted December 23, 2011 Share Posted December 23, 2011 Interesting, I thought they are getting this price for the proven area... but it's actually the new play. nice deal. Link to comment Share on other sites More sharing options...
Myth465 Posted December 23, 2011 Share Posted December 23, 2011 Not bad. Not bad. I almost bought more in the low $6s Link to comment Share on other sites More sharing options...
gordoffh Posted December 23, 2011 Share Posted December 23, 2011 well i have to admit i was getting a tad nervous with the stock reaction after the last quarter announcement of the new land leases - i did continue to buy and SD is by far my largest postion - nice christmas present - ward appears to have everything in place to carry out his 3 year plan with some nice hedging just in case - and they still have all that gas and i see their new partner is big in LNG - the upside looks very promising Link to comment Share on other sites More sharing options...
alertmeipp Posted December 23, 2011 Share Posted December 23, 2011 Ward executes really well. Sharp contrast to ATPG. Link to comment Share on other sites More sharing options...
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