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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (50883)	2/13/2013 5:39:30 PM
From: AFed	Read Replies (1) \| Respond to of 78740

Hi EKS, Funny you mention Penn West -- I was digging into Lone Pine Resources (LPR) and I noticed it as well. I agree with you and think the PWE assets are wonderful, but I'm too chicken about the leverage and the fact that they appear to be "burning the furniture to heat the house," so to speak, by continuing to pay out the dividend by selling assets + cutting back on development CapEx. My thought here was to buy when they announce that they're stopping the dividend -- the shareholder base appears to be retail-heavy given the enviable dividend history, so I figure this will see some highly irrational selling if/when that happens. If it doesn't happen, I'm OK with missing out. Do you (or others) have any other thoughts on the name? Side Note: Has anybody else looked into LPR? It's a spin-off (via IPO + Distribution) from Forest in 2011... couldn't have been worse timing. +80% NatGas exposure, <20% Oil... plus the oil is Edmonton Par, so realized prices are a $20/bbl discount to WTI due to the lack of a good pipeline from Alberta to the Gulf. Depending on whether the Company is able to sell assets or JV its oil-rich Evi lands, it may be headed into either bankruptcy or a +300% return. Clearly it's at a deep, deep discount to its PV10, but I trust those reserve #'s about as much as I trusted subprime mortgage originators' residuals :) [i.e. more assumption inputs than a millipede has legs]. - Afed

To: E_K_S who wrote (50883)	2/21/2013 12:59:01 AM
From: Spekulatius	1 Recommendation Read Replies (2) \| Respond to of 78740

>>FWIW, if/when LNG is exported from Western Canada, PWE will be a huge beneficiary. This is another reason I continue to build my position.<< The operators of the LNG terminal (APA, CVX) will capture the biggest chunk of the margin between cheap NA NG (~3$/mcfe) and the asian market (~10$/mcfe) because they own the enabling asset. APA and CVX also have plenty of acreage as well, which they probably feed first into the terminal, which is the whole idea to build it to begin with. Sure,taking away supply (via export) will benefit other players like PWE too, but all that much, given how plentiful the NG supply is. Besides that, the construction of the Kitimat terminal has just begun and completion is a few years out and not a sure thing to begin with. I think APA is cheaper on a proved reserve/EV basis (~13$/ BOE, half of which is oil) than PWE and there is no risk if APA going belly up, plus they have the Kitimat option (50%ownership, with CVX as a second partner), midstream assets that can be moved in an MLP, undeveloped resources, landbank, none of which is assigned much value in the current shareprice, imo. I know that the current operating results are not that pretty to look at, but it is an E&P that has proven itself over time and gown reserves/share over time, which cannot be said about PWE.