Wrap – Week Ended 6/5/15



Busy weekend, apologies for the late posting of The Wrap. Questions and comments will be addressed in the Monday post. The portfolios tread water last week (up 1% for the most part) following four weeks of softness. Thanks, Z


wrap 060515

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11 Responses to “Wrap – Week Ended 6/5/15”

  1. 1
    tomdavis12 Says:

    Z  If I am reading you correctly, you have indicated that going forward the stronger E&P names seem to be acting better and you would expect that to continue. A comment made by EOG is that they would not consider buying anyone that did not have good rocks, at least as good as what they have now or better. Therefore, I am wondering whether you have considered lessening all your positions in favor of high grading your holdings? A mistake I made was not expecting the sharp drop in crude leaving me with positions that I now look at as riskier than if I started my holdings today. An idea I would throw out is to put your names in tiers according to risk. I would use rocks, balance sheet and mgmt as initial criteria. Some tiers could be established according to basins or commodity type. I am not trying to give you more work but the level of risk delineation would be very helpful. Just a thought.   

  2. 2
    nrgyman Says:

    RE 1:  Found a table in this 6/3/15 Investor Day presentation from MWE that shows (on slide 7) a recent Credit Suisse breakdown of the resource plays by IRR, dated 5/27/15.  CS used conservative numbers for pricing in this table, as shown, but gives no indication of service cost levels assumed.  With service costs dropping 15-30% the IRRs will get a big boost.  Still, assuming service costs are distributed relatively evenly, the rankings shown may have some value.  Not sure the Delaware resource opportunity is fully/fairly represented in this table though–perhaps because it is relatively new and not enough data is accumulated.  For instance, XEC is showing 73% IRRs at $50 oil with their XL fracs of Culberson Co. wells (JV with CVX).  EOG is pretty excited about the Delaware as well, which is seeing increased capex from them despite big cuts elsewhere.  The highest IRRs shown in the CS table are less than 30%, with higher priced oil, so the Delaware zones targeted by these names appear to be among the best around.  They could be 'hot spots' in a shale zone or the Delaware shales could offer more widespread high IRRs–might still be too early to know, but the excitement is there right now.

    This may help give some direction about where to find the 'good rocks'.


  3. 3
    Baylor Says:

    Looks like the rows in the NG section are reversed

  4. 4
    zman Says:

    re 3 – I don't follow, where exactly in the table are you looking?

  5. 5
    nrgyman Says:

    Also mentioned in the MWE presentation is a shale in the southern Appalachian basin called the Rogersville Shale.  Apparently EQT, CHK and others are exploring there and MWE seems to think it has promise because they are building midstream infrastructure there.  Z, if you or anyone else has any comments or data/useful info about that please share it.  

    FWIW, that MWE presentation above has info I found useful about the Utica/Marcellus and natgas development.  MWE is the largest midstream operator there and is dealing directly with all of the top players.  

  6. 6
    zman Says:

    re 5 – will address Monday

  7. 7
    Baylor Says:

    Re 4, the "gas in storage" and "change" rows appear to have the labels reversed. 

  8. 8
    nrgyman Says:

    RE 6:  Thanks.

  9. 9
    zman Says:

    re 7 – ah, thanks. 

  10. 10
    Baylor Says:

    Re 9, i know you just threw it in there to see how closely we were reading 🙂

  11. 11
    zman Says:

    re 10 – LOL

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