SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Strategies & Market Trends : Value Investing
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Paul Senior who wrote (48044)5/19/2012 12:24:22 PM
From: E_K_S  Read Replies (1) of 78748
 
Re: Hess Corporation (HES)

Paul -

When they calculate Tangible Book Value (TBV) and/or BV are the BOEPD reserve estimates used in the calculation? Therefore, with their Bakken property production reduced, I would think that the TBV and/or BV would be reduced a bit too. In this case it would be quite small but I just was not sure how the TBV is derived (especially for Integrated Oil Companies) and how the reserve estimates are factored into this number.

I recall several years ago where Royal Dutch had announced on a Monday that their estimated reserves were 30% too high and with one news release adjustment over $1B in "perceived" value disappeared "poof". The stock sold off but not by 30%. It still made me sell my position as I was suspect on all their other reserve estimates. The stock traded flat for several months but eventually traded at similar PE's to it's peers.

I know that these calculations are not an exact science especially with well depletion estimates that vary significantly from type of well and geographic region. I wonder what the average age of their Bakken wells are and if they may be seeing larger depletion amounts vs their estimates. This may be the case with many if not all of the older production wells in that region. Maybe many of the other E&P companies may experience the same accelerated depletion rates as their wells age and this has yet to be priced into the market for those companies that operate in that geographic region (ie Bakken Shale area).

That may be another reason to go with a larger well diversified (across several geographical regions)company rather than a a specific E&P play.

EKS
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News