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

To: smaycs4 who wrote (52181)	8/21/2013 6:02:57 PM
From: E_K_S	2 Recommendations Recommended By CusterInvestor DanWebzster Respond to of 78667

Hi smaycs4 - Tax loss selling is an advantage to the value investor. My main concern is if I evaluated their assets correctly and/or if I missed any significant potential land mine (one possible area is the size of their debt especially if they can not sell their Louisiana assets at top dollar). I plan to average into this position and use proceeds from my small more speculative E&P positions that I have gains and/or losses in. For me, SFY is a more mature E&P able to post some good profits (not always posting losses like some others I own), they seem to have some good acreage in the Eagle Ford shale region and have assets in Louisiana which they committed to sell to finance their 2013/2014 drilling budget and/or pay down some long term debt. Their 50K acres in Colorado is interesting but they need to get that Eagle Ford acreage producing. Like Paul Senior posted, Swift Jr. (SWIFT TERRY E). bought 20K shares in 8/2013, so he must be positive on the 2013/2014 corporate development/drilling plan. I have found that the E&P's that just turn profitable and can stay profitable usually have the best gains when held for the longer term. The stock may have got ahead of it's self hitting in the mid $40's in 2011. The drilling expenditures can ramp up and if you go over budget and/or hit some dry holes and/or commodity prices crash, you may need additional capital to finance the next round of Capex. That is what appears to have happened w/ SFY and according to the article I posted "...The company’s net income fell 79 percent from 2011 to 2012 because of falling natural-gas prices that collided with the company’s increased spending on drilling and completion activity. The company had to issue more debt – about 30 percent more than in 2011 – to keep its operations going...". According to their Web site. "... we are also exploring joint venture arrangements for a portion of our Eagle Ford properties to accelerate drilling and development, monetize a portion of those asset values, diversify our risk profile and possibly free up capital dollars for other purposes...". Here is the link to their last Corporate Presentation: Some of the takeaways that caught my eye: o Substantial inventory of natural gas projects for future development o Niobrara Well, SW Colorado 3Q Spud (some very successful drillers have wells located in the Niobrara) o Multi-year, de-risked inventory of liquids rich projects The sooner they get their Louisiana property sold, the faster they can pay down some of that debt. The wild card (and for me a good "value" bet speculation ) is their huge NG MBOE proved reserves which they can land bank and/or hedge until the NG price recovers (see chart above). So it's a balancing act on reducing long term debt, moving wells into production and streamlining their uplift & transport costs so those NG reserves become a cash cow. At $11.00/share it's in my value range and even more so on lower prices. EKS