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Hey Oil Barons.......


936horn

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I am thinking that the withdrawal from the Iran deal may have been fully priced in already, I think there’s been a record number of long positions on crude held by hedge funds, etc for the last little while. I checked Kemp’s column today and he mentioned that with the recent highs they are starting to liquidate those positions. Commentary: Hedge funds hold fire as oil prices hit multi-year highs

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On 4/11/2018 at 3:27 PM, T’Boo Ted Marshall said:

LGCY has been on a tear the last 90 days.  Never thought I would see that from them.  

I took a flyer on LGCY when I saw this post. Been up over 40% since then and on fire today. Got anymore winners? 

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4 minutes ago, 3adays said:

I took a flyer on LGCY when I saw this post. Been up over 40% since then and on fire today. Got anymore winners? 

I've got a few thousand shares of CRZO at 18.24, plus 30 call options on the 20 strike that expire next friday.  

I absolutely love Ensco right now (ESV) with the Venezuela and Iran situations.  

 

Still riding CHK with wayyyyyyy too many shares, but i've averaged down to where I'm comfortable I'll actually earn a return on it this year.  

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I took a flyer on LGCY when I saw this post. Been up over 40% since then and on fire today. Got anymore winners? 

Be careful with LGCY and all other MLPs. If they go through a restructuring and you own the partnership interests when the debt is canceled you will have to recognize income. Happened to Linn and other E&P MLPs.
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5 hours ago, Trey3216 said:

I've got a few thousand shares of CRZO at 18.24, plus 30 call options on the 20 strike that expire next friday.  

I absolutely love Ensco right now (ESV) with the Venezuela and Iran situations.  

 

Still riding CHK with wayyyyyyy too many shares, but i've averaged down to where I'm comfortable I'll actually earn a return on it this year.  

I’ll look at Ensco and CRZO. I’m with you on too many shares of CHK. I FINALLY went green with them today owning mine at an average of $3.20. Long with Lawler...lol

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22 hours ago, HouTex said:


Be careful with LGCY and all other MLPs. If they go through a restructuring and you own the partnership interests when the debt is canceled you will have to recognize income. Happened to Linn and other E&P MLPs.

They're getting healthy.  The reason for the dramatic uptick is their announcement that they're converting to a corporation and leaving the MLP structure behind.  

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They're getting healthy.  The reason for the dramatic uptick is their announcement that they're converting to a corporation and leaving the MLP structure behind.  

Well, the market is getting better. But the conversion to a C corp is partly to deal with the CODI issue. The conversion is its own taxable event. The hope is that it will be less than remaining an MLP with the resulting CODI.
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2 hours ago, tequila said:

They're getting healthy.  The reason for the dramatic uptick is their announcement that they're converting to a corporation and leaving the MLP structure behind.  

 

1 hour ago, HouTex said:


Well, the market is getting better. But the conversion to a C corp is partly to deal with the CODI issue. The conversion is its own taxable event. The hope is that it will be less than remaining an MLP with the resulting CODI.

I’m not sure how they could’ve remained an MLP without eventually ending up in Ch 11. It is not sustainable and I believe the only one left is MidCon. 

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I’m not sure how they could’ve remained an MLP without eventually ending up in Ch 11. It is not sustainable and I believe the only one left is MidCon. 

It's the debt level that is driving it. They can't pay the debt as it is coming due. So they have to restructure with the debt holders eventually owing most or all of the new equity. As the market improves then equity might be in the money. Hence the increased equity price. The restructuring triggers the CODI so the company figures out which alternative lessens the tax burden on equity. Often times the C Corp conversion is better than remaining an MLP throughout the process. Either way, though, equity holders that stay in will take a tax hit.
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5 minutes ago, HouTex said:


It's the debt level that is driving it. They can't pay the debt as it is coming due. So they have to restructure with the debt holders eventually owing most or all of the new equity. As the market improves then equity might be in the money. Hence the increased equity price. The restructuring triggers the CODI so the company figures out which alternative lessens the tax burden on equity. Often times the C Corp conversion is better than remaining an MLP throughout the process. Either way, though, equity holders that stay in will take a tax hit.

Yes, the debt was incurred as a means to buy PDP pre downturn and now that PDP is significantly less valuable.  But a lot of companies overlevered.  The reason this particular model is unsustainable is the combo of debt plus paying unit holders distributions that sharply fell and then people start selling.  This isn’t midstream; MLPs don’t work for E&P.

I had not considered the tax effect.  Most people I know that took a flyer on them did so when the valuation was significantly depressed, on the hopes that they would convert to a C-Corp.  I’m not sure if that lessens their tax event, but I would bet none are thinking of that.

 

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15 minutes ago, Trey3216 said:

CHK turning into the little engine that could the last week or so.  I'm finally within striking distance of breaking even after continuously averaging down for 2 years.  Lol.  

Haha, I’m only 9% underwater on CHK and I’m excited that I’m that close. 

 

 

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4 hours ago, RiceOwl said:

Almost to my average cost of 3.78 on CHK!! 

MTDR had been on a good run up but it’s shares have taken a dip the last few days after they announced they issuing additional equity.

Well, now you're .15 in the green.  This is about to go on it's roll like it did feb-june '16  

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3 hours ago, kevwun said:

Any of you barons know anything about GeoSouthern?  They are leasing land in my area and I'm wondering if they're a decent company.

Your mom is decent company. 

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6 hours ago, kevwun said:

Any of you barons know anything about GeoSouthern?  They are leasing land in my area and I'm wondering if they're a decent company.

Solid company. Probably the biggest winners of the previous cycle for a private company.

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1 minute ago, DCA_HORN said:

Solid company. Probably the biggest winners of the previous cycle for a private company.

Odd comment. I banked several private companies that sold their assets for over $1B in the throes of the downturn. I’d say they were bigger winners. 

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28 minutes ago, DCA_HORN said:

I guess I meant for those that actually developed the asset and not just the land flippers.

A lot of those divestitures had 4-6 rigs running on them for years prior to sale. And I don’t know how anyone could know the best private development companies - because of the inherent nature of private companies. 

But I agree, GS is a good company. Sorry for the derail Frieda’s boss. 

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2 hours ago, DCA_HORN said:

Ones that sell for $6 billion you generally know of. 

You said “previous cycle”. I could have sworn it read “through the cycle” or something that told me “the winners through this downturn”. At any rate, I know of several individual companies that have had many sales over $500MM in the last several years, including through the downturn. One of which had 4 sales between $1B and $3B that would exceed that $6B. But, I misread you, apologize, and good point. 

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Nothing. It’s a shit company with a deep-seated shit culture. Gas prices are not going to recover any time soon. If you have a chance to get out close to even, do it. 

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1 hour ago, Rex Kramer said:

Nothing. It’s a shit company with a deep-seated shit culture. Gas prices are not going to recover any time soon. If you have a chance to get out close to even, do it. 

Do you used to work there? Or get fucked over by them?

(not saying you're wrong about the stock)

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41 minutes ago, Neonmoon said:

Do you used to work there? Or get fucked over by them?

(not saying you're wrong about the stock)

Nope. This is common knowledge. They’ve always been a terrible company. 

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41 minutes ago, Fudge Nuggets said:

Seems that companies that bought good assets at distressed prices would be the big winners; not those that were selling in the worst downturn in 30 years.

Yeah it would seem that way, but the Permian Basin doesn’t make great sense. 

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25 minutes ago, MAROON said:

speaking of shit companies - Rex finally filed Chapter 11 this morning.

Can’t stand the principals. Used to bank them in predecessor companies they had. Hothead Penn St jackasses. One of them left to start Eclipse. They are snakes. 

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