Replies to This Discussion

Permalink Reply by GoshDarn on February 13, 2012 at 11:33

Norte:

The chart on DEL has moved up dang well since it was first tipped on GHS (maybe it was last summer or so).

Something like a 40% rocket up (more or less).  Interesting company.

Glad BLK likes it (now).  That old adage "sell half, take the profit, and let the rest ride" -- for those who bought DEL at 48 -- would be one reshuffling of the deck, since it might soon hit a new 10-year high.

BLK.  (Those hedgers can move a dang stock.)

Now, for those with Doc Holiday guts -- since the BLK news will juice it, as you know -- the upside ride could continue -- COULD -- continue to 90 or so before a profit bloodbath steals its thunder.

Thanks for the post, Norte La.

Permalink Reply by North LA on February 13, 2012 at 11:48

Add Oxy to the list.

 

http://ih.advfn.com/p.php?pid=nmona&article=51164727

 

I've been told they own a lot of the minerals in the old Monroe gas field.

 

And add Exxon/Mobil. This may have nothing to do with the LSBD since that is such a small portion of XOM.

 

http://ih.advfn.com/p.php?pid=nmona&article=51163628

Permalink Reply by The_Baron on February 14, 2012 at 4:06

They may just be buying in the hope that they can get a healty bump and sell out. Regardless is the LSBD produces these companies have to promote it in the early stages.

 

 

Permalink Reply by North LA on February 14, 2012 at 4:40

Yeah Black Rock bought before the PR campaign. Buy on a rumor sell on a fact.

Permalink Reply by L Davis on February 23, 2012 at 6:27

Deltic annual earnings says nothing about the brown dense.  Deltic reported $6.4 million royalty/rental in 2011 versus $5.7 million in 2010. 

http://www.magnoliareporter.com/news_and_business/local_business/ar...

 

Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2012 at 6:30

I seriously doubt that BlackRock is making any investment decisions based on the possibility of an economic LSBD prospect.

Permalink Reply by Alan on February 23, 2012 at 10:48

Agreed.  You don't make multi-billion dollar decisions based on a rumor.  If these purchases by BlackRock are indeed LSBD-driven (and what else would they be), you can bet the farm BlackRock has some pretty solid info.

Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2012 at 11:07

SWN doesn't know if the LSBD will be an economic play.  Neither does BlackRock.  BlackRock acquires distressed companies for their assets.  BlackRock looks at the SWN share price, the cash flow, debt and the product mix.  IMO, they are investing because they see an opportunity to either acquire SWN or make a profit on their stock when another party acquires them.  The assets that BlackRock is interested in primarily are SWN's Fayetteville Shale position and secondly their Marcellus leasehold.  SWN has two major problems currently:  their product mix (100% gas) and all there cash flow eggs in one basket, the Fayetteville Shale.  Since it is corporate reporting season, many E&P presentations contain a graph such as the one below.  I haven't reviewed the ranking to see if there any variations but I know that SWN is the last one on every list.

Permalink Reply by DavidR on February 23, 2012 at 11:42

>> BlackRock acquires distressed companies for their assets.

For real?  Distressed companies?  Their top holdings are in companies like Apple, Exxon, AT&T, J&J, Microsoft, IBM, Chevron, GE, etc.

  Blackrock's investment increase was CLEARLY about LSBD.  The timing is not coincidental.  They recognize that SWN isn't blowing smoke and if they want to participate in the 3 billion bbls SWN has stumbled onto they needed to act now, not a year from now.

Permalink Reply by Skip Peel - Mineral Consultant on February 23, 2012 at 11:47

The LSBD is unproven.  BlackRock is interested in the proven assets.  88% of SWN's cash flow is from Fayetteville Shale production with much of the remainder coming from their midstream operations.  SWN is the least flexible, most vulnerable company in their industry segment.  They are a take over target and if natural gas prices do not improve this year, I think they will be acquired.

Permalink Reply by DavidR on February 23, 2012 at 12:56

>> The LSBD is unproven. 

Yes, it is.  But the biggest player in the region has made statements that provide those who listen to such things more confidence in the LSBD.  As pointed out last week, remarks by SWN were not made lightly and would not have been discounted by professional money managers nor would information they obtained through research leading up to those recent remarks.

>> BlackRock is interested in the proven assets.

Blackrock is not interested in SWN's "proven" assets per-se.  That isn't the business they're in.  They're interested in SWN as a "going concern".  They recognize that SWN, at least, thinks it has a winner in LSBD.  The gas property is also dirt cheap right now, so there is no better time to buy. 

  Only one thing explains the coincidental decision to substantially escalate positions in Deltic, Plum Creek, etc.  This is the way money managers work. 

Q: "How can we play LSBD without too much exposure in any single place?" 

A: "We'll pick up positions in a couple of drillers and at the same time play the minerals side with Deltic & Plum Creek".

>> BlackRock is interested in the proven assets.  88% of SWN's cash flow is from Fayetteville Shale production with much of the remainder coming from their midstream operations. 

  If BR were looking at SWN's underlying assets for profits it would be taking a much larger position than it has so as to control them.   And that doesn't explain it taking positions in the other companies.  They are interested in participating in the LSBD, which could easily become a $300 Billion Plus asset overnight, based on a $0.3 Billion investment.  This position is, in effect, highly leveraged with the control they have through the unitization process -- leveraged, but without the associated debt/expense.   LSBD is still a small amount to Blackrock, but this is the kind of thing money managers are interested in. 

>> SWN is the least flexible, most vulnerable company in their industry segment. 

They're well-hedged on gas, have a large stake in LSBD which at the very least has a great deal of high-yield potential, and their marginal cost of getting gas out of the ground is pretty much the lowest in the industry.  They are not massively in debt.  And the stock's price has held up remarkably well under the circumstances.

>>> They are a take over target and if natural gas prices do not improve this year, I think they will be acquired.

I wouldn't disagree about this.  Every company is a takeover target if a bigger company has the money and wants the assets. 

  Personally, I think SWN is pretty well managed, and I suspect Blackrock thinks that, as well.  SWN is handling the gas glut pretty well and the prospect for a huge increase in the value of LSBD is considerable.

Permalink Reply by GoshDarn on February 23, 2012 at 11:10

Et al:

Note:  BlackRock is an 800-pound (trillion) gorilla.  So they might simply be doing nothing more than diversifying their portfolio by spreading their risk per eggs in different baskets.  Hedging the hedge.  Many aspects of the "energy sector" look appealing right now.  Energy is the darling of Wall Street.   

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