Talisman and Painted Pony – updates

TALISMAN ENERGY (TLM-TSX): Sale of
Eagle Ford on the horizon?

Look at that trading range with an $11 base and
$13 ceiling. What’s the catalyst to take it
beyond that $13? Carl Icahn & American
buyers?

Call it a comeback? Shares of TLM jumped after
the company posted strong Q1/14 earnings, driven
by higher North American gas and liquids prices,
increased liquids volumes and a gain on the sale of
assets. Additionally, Q1/14 production of 384
MBOE/d (includes assets held for sale) was also
above expectations. The EPS beat Skolnick’s (CG)
estimate was a result of better-than-expected
production as well as lower-than-forecast royalties
and unit op-costs. Having reached the lower end of
the prior US$2-3 billion in targeted divestments
faster than the expected 18 month timeline,
management remains confident in hitting its next
US$2 billion target. Furthermore, according to a
Bloomberg article, both TLM and its 50% JV
partner, Statoil (STO), are considering selling
their joint venture in the Eagle Ford, which
could fetch more than US$4 billion total

PAINTED PONY PETROLEUM (PPY-TSX ): DO YOU BELIEVE IN NATURAL GAS?

Shares of Painted Pony Petroleum are down from their $12.14 highs of last month. PPY reports Q1/14 results on Tuesday, May 13 (after market close). Canaccord Genuity Energy Analyst Anthony Petrucci is expecting a positive operational update, including robust production numbers, further color on improved completion techniques and likely an increased bank line. This is a company that expects to increase production by 50% per share this year and another 60% per share next year. Recent production numbers suggest they are ahead of their forecast pace. The company’s five-year plan has them reaching 100,000 boe/d in 2018 (current production of ~13,500 boe/d). They could potentially reach that level just by drilling
on existing drilling pads, and would only have drilled <15% of potential drilling locations.

Given the company’s forecast production next year of 20,500 boe/d, Petrucci says PPY is now trading at just 5.7x 2015 EV/DACF.

Recent well performance is well ahead of type curve (~30% better) given an adjustment
in completion techniques. The biggest risk to PPY’s model is natural gas prices, as the geological risk has been significantly reduced given the extensive delineation drilling the company undertook prior to its development drilling program. If natural gas prices hold in Petrucci believes PPY will be successful in reaching its lofty production targets.

 

Trading Alert WRES

Added to positions

- Jack A. Bass Managed Accounts

WRES

WARREN RESOURCES INC(WRES:NASDAQ, US)

5.26USDIncrease0.07(1.35%)Volume: 
Below Average
As of 22 Apr 2014 at 10:28 AM EDT.

QUOTE DETAILS

Open 5.22 P/E Ratio (TTM) 12.4x
Last Bid/Size 5.25 / 16 EPS (TTM) 0.42
Last Ask/Size 5.26 / 2 Next Earnings 5 May 2014
Previous Close 5.19 Beta 2.31
Volume 108,870 Last Dividend
Average Volume 871,471 Dividend Yield 0.00%
Day High 5.27 Ex-Dividend Date
Day Low 5.13 Shares Outstanding 73.1M
52 Week High 5.44 # of Floating Shares 69.65162M
52 Week Low 2.46 Short Interest as % of Float 2.00%

Quicksilver Alarm Bells

My  recent column suggested watch and wait . a number of readers replied they were committed and certain .

I am watching and the market has yet to bless KWK .

Here is an extract from a Seeking Alpha article warning that Quicksilver and Forest Oil face such pressures that bankruptcy may be in the future.

  • The high natural gas price has trapped both companies which have loaded their balance sheets with a lot of debt.
  • Both companies have tried to deleverage their balance sheets over the last 12 months.
  • They still have a long way to go in order to strengthen their weak balance sheets.
  • A bankruptcy is not out of the question.

Valuation Results

Both Quicksilver and Forest have a lot of work to do on the debt front. Those investors who ignore the debt hurdle or try to put it aside, are making a huge mistake. In fact, both companies carry scary debt to CF ratios that threaten their survival, considering also the fact that the natural gas price is inflated currently and will not stay at the current levels of $4.5/MMbtu for long.

Moody’s Shale Gas – Sector Review

eeking Alpha via dynect-mailer.net 

11:52 AM (7 minutes ago)

to me
 as reported by Seeking Alpha April 1
not great review for Quicksilver

Moody’s: Marcellus shale gas producers to benefit most • 2:51 PM

  • Marcellus shale gas producers will benefit more than producers elsewhere in the U.S. because of several favorable circumstances, even if prices were to decline to 2012 levels, according to a Moody’s report.
  • Anadarko Petroleum (APC), Southwestern Energy (SWN) and Chesapeake Energy (CHK) – all of which entered the play early during a weak natural gas price environment – especially have benefited, Moody’s says.
  • An infrastructural overhaul is still needed as buyers move away from traditional production hubs such as the Haynesville and Barnett, the credit rating agency says; the transition already has caused a decline in credit quality for Exco Resources (XCO), Forest Oil (FST) and Quicksilver Resources (KWK).

Pine Cliff Energy Ltd. BUY

PNE : TSX-V : C$1.42

BUY 
Target: C$2.25

COMPANY DESCRIPTION:
Pine Cliff Energy Ltd. is a junior oil and gas producer
focused on dry natural gas, with assets in Alberta. Pine
Cliff trades on the TSX Venture under the symbol “PNE”.

All amounts in C$ unless otherwise noted.

Energy — Oil and Gas, Exploration and Production
TIME TO GAS UP
Investment recommendation
We are initiating coverage of Pine Cliff Energy with a BUY rating and a
C$2.25 target price. PNE has had a great run over the last year,
increasing its share price by ~60%, but in our view, this is just the
beginning. Driven by accretive acquisitions and a rebounding gas price,
we expect this stock to go materially higher over the coming year, as
reflected in our forecast return of 58%. Our valuation is NAV based and
maps to a 2014E EV/DACF of 14.7x.
Why we believe this stock is set to outperform:
 Gas Leverage to the Extreme. Simply the best way to gain
exposure to rising gas prices, in our view, given a production
base that is 95% dry gas with no hedging in place. As
highlighted in Exhibits 1 and 2, PNE is the most levered
company to natural gas prices in our coverage universe, with a
$1 increase in AECO prices driving an increase to estimated
CFPS of ~40% and an increase to NAV of over 40%. In our view,
if you want to own gas, you want to own Pine Cliff.
 Acquisitions to drive performance. PNE has taken a contrarian
approach by purchasing dry gas while others chase oil and
NGLs. The last two significant acquisitions by the company over
the last year have resulted in share price bumps of 46% and
36%, respectively. PNE currently trades at 9.0x 2014E
EV/DACF, but as we walk through in Exhibit 3, if the company
were to buy $100 million in assets at 5x cash flow, this multiple
would be just 6.8x 2015E estimates. Use a 5$ AECO price and
it’s at just 5.4x.
 Our Call? Give this management team your money. George Fink
is well respected as an excellent steward of capital, and for
good reason. Early investors in Bonterra Energy (BNE: TSX: Not
Covered) have been handsomely rewarded over the last 16
years, with a CAGR of 45% since 1998. In addition to the energy
space, Mr. Fink has also had success in mining, where at
Comaplex Minerals he provided investors with a CAGR of 21%
over a 15 yeear period.
Our C$2.25 target price is based in part on our assumption that the
company will be successful in completing $150 million in acquisitions
over the next year and post transaction its multiple will return to the
natural gas peer group average of 9.0x EV/DACF

Quicksilver Resources – Momentum Is Still To The Downside

Watch – Don’t Buy Until A Reversal Is Confirmed

In my book The Apprentice Millionaire Portfolio ( available on Amazon) I outlined the profits made as I chased Peyto Exploration( PEY ) an Alberta based natural gas producer from below $8 to above $30. As I am happy to report this one investment paid for my daughters to go to University.

I thought I had / have ? detected the same promise in Quicksilver Resources  ( KWK) at the end of 2013. It has suffered – I should say the shareholders have suffered greatly – and now it appears their profit salvation is at hand- or at least so it appeared when the stock went to the $3.50 level and 30% was still short. I had along with many others anticipated a rising nat gas price , rising stock price and short interest would propel the stock price. It did not happen and – again to quote Keynes ” When the facts change , I change ( my opinion) – what do you Do ?”

The point is that when your investing thesis proves wrong – get out and place your funds elsewhere. Don’t become wedded to a losing proposition . Not every investment decision can possible work out as we  ( optimistically ) anticipate.

Here is a one year chart – note Jack A. Bass Managed Accounts entered / exited  at the end of 2013  and beginning of 2014

Problem copying chart – available at stockcharts.com

Quicksilver Resources Inc(KWK:NYSE, US)

BuySell
2.63USDDecrease0.05(-1.87%)Volume:
Above Average
As of market close 21 Mar 2014.

Quote Details

Open 2.70 P/E Ratio (TTM) 2.9x
Last Bid/Size EPS (TTM) 0.92
Last Ask/Size Next Earnings 5 May 2014
Previous Close 2.68 Beta 2.02
Volume 13,051,380 Last Dividend
Average Volume 4,882,480 Dividend Yield 0.00%
Day High 2.86 Ex-Dividend Date
Day Low 2.59 Shares Outstanding 177.2M
52 Week High 3.67 # of Floating Shares 123.9008M
52 Week Low 1.44 Short Interest as % of Float 25.72%
 It failed to hold – despite record withdrawls from the natural gas storage and brutally cold weather in the nat gas fuel area of the north eastern U.S. I got in and out at that level and am watching the stock. It offers great promise – but they used to say the same thing about me.
The recent quarterly results did nothing to help the stock now a recent asset sale to reduce massive debt.
The recovery is still ” just over the horizon “. The book ” The True Believer” offers the psychological insight into those committed to an idea remaining committed long after any analysis could justify the continued commitment.
This is a stock to watch but to paraphrase    – the old saying  -  ” you can go bankrupt long before the market becomes rational “.
Repeated efforts to guess where the bottom is has caused many a holder to suffer with this stock. Jack A. Bass Managed Accounts broke even on this one and I hope may profit in adding this in the future – BUT NOT TODAY.
 NOTE:The same reasoning applies  is our continued interest in the shipping sector – closer to a recovery with the recent recovery of the Baltic Dry Index.
Recent Results :
Quicksilver Resources Reports Preliminary 2013 Fourth-Quarter and Full-Year Results

14 Mar 2014 – ACQUIREMEDIA

FORT WORTH, Texas, March 14, 2014 (GLOBE NEWSWIRE) — Quicksilver Resources Inc. (NYSE:KWK) today announced preliminary 2013 fourth-quarter and full-year results.

2013 and Q1 2014 Highlights:

– Raised proceeds and announced sales for total of $596 million

  •   Sold 25% interest in Barnett Asset to TGBR, a subsidiary of Tokyo Gas Co., Ltd., for net proceeds of $464 million
  •   Sold Montana Asset to Synergy Offshore LLC for net proceeds of $42 million
  •   Announced sale of Niobrara Asset along with SWEPI LP to Southwestern Energy Co., which is expected to generate cash proceeds of $90 million

– Refinanced $1.1 billion in debt, extended maturities and reduced weighted average interest rates

– Increased pro forma proved reserves by 20%

– Secured partners on the West Texas Asset and narrowed focus on core Wolfcamp to Pecos County

– Added to the 2014 derivative position; approximately 75% of expected 2014 equivalent production covered with commodity swaps at a weighted average price of $5.08/Mcfe

– Resumed Barnett drilling activity in the third quarter with the goal to rebuild volumes

– Secured amendment to lower gathering rate and defer capital spending requirements in the Horn River Basin

– Secured site for potential LNG exports from Canada

“Over the last year, Quicksilver has reduced debt, enhanced liquidity, and advanced projects,” said Glenn Darden, Quicksilver’s Chief Executive Officer. “We have more work to do, but with the improvements made, and what we believe will be more to come, 2014 is shaping up to be a significant year for this company

Raging River Exploration Inc

RRX : TSX : C$7.95  
BUY  Target: C$9.00

COMPANY DESCRIPTION: Raging River Exploration Inc. is a junior E&P company focused on the development of the Viking light oil resource play in Saskatchewan.

Energy — Oil and Gas, Exploration and Production INCREASED GUIDANCE AND NEW FARM-IN ACREAGE
Investment recommendation

Raging River announced fourth quarter results and an operational update which was highlighted by continued momentum in the first quarter, a new 100 section farm-in transaction, and increased guidance given a capital spending increase related to new farm-in well plans.  Overall, the release was positive and reinforces our positive view of the stock. The increased inventory and growth related to the farm-in adds $0.40 of value to our NAV and a commensurate $0.50 per share increase to our target to C$9.00, which is based on an unchanged 1.1x multiple to NAV and a 9.1x EV/DACF multiple.
Investment highlights Step out success at Forgan. Assuming its new wells track a Tier 6 curve and one of its six wells at Forgan was drilled on a section with no prior inventory assigned and the other five were on sections with a prior Tier 4 assignment, we estimate the value uplift from its step out success year- to-date to be ~$65 million.
Surging forward with a new farm-in. Raging River announced a farm-in transaction with an industry partner on 100 (95 net) sections at Dodsland. Based on its updated presentation, we suspect the farm-in was on Surge Energy (SGY: TSX, BUY, covered by Anthony Petrucci).  The transaction is positive as it adds ~60 low to medium risk drilling opportunities and potential upside to 360+ locations upon success.
Guidance gets a lift.  2014E CAPEX increases by $20 million to $235 million with a commensurate increase to average and exit production rates implying incremental capital efficiency of ~$40,000/boepd.
Valuation Raging River currently trades at a 0.9x multiple to CNAV estimate, 8.4x EV/DACF, and $157,500/BOEPD based on our 2014 estimates vs. its peer group averages of 0.7x CNAV, 6.7x EV/DACF, and $83,200/BOEPD

Quicksilver Resources ( KWK) – no respect for the effort

Glenn M. Darden - Chief Executive Officer, President, Director and Member of Equity Awards Committee

Thank you, David. Good morning. Today, Quicksilver reported earnings for the fourth quarter and for the full year 2013. For the fourth quarter of ’13, we had an adjusted net loss of $5 million. The full year reported earnings were positively impacted by the sale of the Barnett properties to Tokyo Gas. And John Regan, our Chief Financial Officer, will give you the financial detail following my remarks.

Quicksilver’s concentration has been on improving the company’s balance sheet and liquidity, and as a result, 2013 was more of a defensive year. On the financial front, we lowered net company debt approximately $300 million to the end of the year. We also refinanced $1.1 billion of company bond debt, which reduced interest expense and extended debt maturities by 2.5 years. We have relied on asset sales to lower debt.

 

Quicksilver Resources Reports Preliminary 2013 Fourth-Quarter and Full-Year Results

       Fri March 14, 2014   7:00 AM|GlobeNewswire          | About:         KWK

FORT WORTH, Texas, March 14, 2014 (GLOBE NEWSWIRE) — Quicksilver Resources Inc. (KWK) today announced preliminary 2013 fourth-quarter and full-year results.

2013 and Q1 2014 Highlights:

– Raised proceeds and announced sales for total of $596 million

  •   Sold 25% interest in Barnett Asset to TGBR, a subsidiary of Tokyo Gas Co., Ltd., for net proceeds of $464 million
  •   Sold Montana Asset to Synergy Offshore LLC for net proceeds of $42 million
  •   Announced sale of Niobrara Asset along with SWEPI LP to Southwestern Energy Co., which is expected to generate cash proceeds of $90 million

– Refinanced $1.1 billion in debt, extended maturities and reduced weighted average interest rates

– Increased pro forma proved reserves by 20%

– Secured partners on the West Texas Asset and narrowed focus on core Wolfcamp to Pecos County

– Added to the 2014 derivative position; approximately 75% of expected 2014 equivalent production covered with commodity swaps at a weighted average price of $5.08/Mcfe

– Resumed Barnett drilling activity in the third quarter with the goal to rebuild volumes

– Secured amendment to lower gathering rate and defer capital spending requirements in the Horn River Basin

– Secured site for potential LNG exports from CanadaQuicksilver Resources Inc(KWK:NYSE, US)

BuySell

 

2.62USDDecrease0.15(-5.42%)Volume:
Above Average
As of 14 Mar 2014 at 3:12 PM EDT.

Quote Details

Open 2.74 P/E Ratio (TTM)
Last Bid/Size 2.62 / 58 EPS (TTM) -2.13
Last Ask/Size 2.63 / 120 Next Earnings 14 Mar 2014
Previous Close 2.77 Beta 2.02
Volume 3,921,026 Last Dividend
Average Volume 3,886,999 Dividend Yield 0.00%
Day High 2.81 Ex-Dividend Date
Day Low 2.53 Shares Outstanding 177.1M
52 Week High 3.67 # of Floating Shares 123.8212M
52 Week Low 1.44 Short Interest as % of Float 25.72%

 

 

Quicksilver Update from motley fool

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Quicksilver Resources Inc. (NYSE: KWK  )  were slipping today, falling as much as 10% and finishing down 7% after it agreed to sell land to Southwestern Energy.

So what: The oil-and-gas producer said it would sell all of its jointly owned holdings in Northwestern Colorado’s Sand Wash Basin, a total of 312,000 acres, for $180 million, half of which it will keep after dividing the payment with SWEPI LP. CEO Glenn Darden said the sale “enables us to focus our development efforts on the Barnett and Canadian projects as well as our previously announced joint ventures in West Texas, and provides the opportunity to enhance company liquidity.”

Now what: The deal is expected to close on May 1, and Southwestern could begin drilling as early as June. Quicksilver has nearly $2 billion in debt on its balance sheet so a $90 million infusion looks like just a drop in the bucket as far as liquidity is concerned. The market seems to view the sale as a poor deal for Quicksilver as it’s giving up a “liquids-rich resource play” for what seems a relatively insignificant cash sum. We may even similar land sales as management seems to be saying it could benefit from greater liquidity and streamlining operations, not a surprise considering Quicksilver’s been operating at a loss. We should learn more about the sale and the company’s future prospects when it reports earnings next week. Analysts are expecting a loss of $0.03 a share.

Peyto Exploration & Development Corp.

Personal note : my daughters went to college on the money I made tracking Peyto from $ 8 to $30

PEY

TSX : C$34.92 
HOLD  Target: C$39.00

 COMPANY DESCRIPTION: Peyto Exploration is a low-cost gas-weighted dividend paying intermediate E&P focused on horizontal drilling in the Deep Basin of Alberta, Canada with highly contiguous land and multi-zone gas potential.
All amounts in C$ unless otherwise noted

Oil and Gas, Exploration and Production GOING LONGER IN 2014 
Investment recommendation

Peyto announced fourth quarter results which were largely in line given pre- announced production and capital expenditures. Its infrastructure remains highly utilized and requires further expansions this year to accommodate growth; Peyto remains poised to do that given ~100 MMcf/d of capacity expansions planned this year. It has noticeably moved to longer lateral horizontals given licenses to date and we see the potential for a 10% improvement in IRR and capital efficiencies from ERH development. Peyto remains one of the highest quality natural gas producers in the Basin and a go-to name for exposure. We maintain our HOLD recommendation and C$39.00 target; however, we will continue to monitor the share price for any improvement in valuation (all other factor being equal).
Investment highlights Envision little change to 2014 budget despite firmer gas prices. Despite higher natural gas prices, we see a low probability of any meaningful increase to its $600 million budget given lead time and infrastructure planning. Additionally, PEY has hedged ~55% of 2014 production at ~C$3.70/Mcf, so it has a relatively modest upside participation.
Going longer in 2014.  Peyto has noticeably shifted its licensing and 2014 well program to extended reach horizontal (ERH) wells. Its average well length in 2013 increased by 7% or 100 meters YoY; we see the potential for a material increase in 2014. It is still early in terms of results and costs for Peyto-operated ERH wells; however, we believe ERH wells could provide a +10% improvement in capital efficiency and +10% uplift in IRR per well, which are not captured in current forecasts.
Valuation Peyto currently trades at a 1.1x multiple to CNAV, 11.3x EV/DACF multiple, and $83,400/BOEPD based on our 2014 estimates, versus peer group averages of 0.8x CNAV, 8.1x EV/DACF, and $77,000/BO

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