Assessing possibility of an SEA sale, page-2

I give it some thought. Referee it like the old WCW 12 noon Sat/Sun Channel 9!

Just quickly though:

1. What do you think SEA debt will be end 2019?

2. TAX = DANGER Will Robinson. Be caught before on this. IRC has severe restrictions on NOLs carryforward on change in ownership/control and can literally trap the uninformed. Section 382/3 I believe. Goes something like this: if ownership of company changes by more than 50% in any 3 year period the ability to deduct NOLs is limited to a rate that is approximately 4%/yr. So if value of comp is $100M then NOL carryforward is $4M. The 50% value test is based on VALUE of shares not how many.

I'm not a tax person though ... just saying be vary careful on how important the NOLs are.

3. Consolidation sure - but not at any price and location/location/location. This might take forever to discuss. Assets vary in value to different buyers

4. Already given - this is HIGHLY dependent on production and margin. Price is mostly set (by the hedges held).

5. So what. He should be IMO. Part of the job.

6. See (3)

7. Yay The Eric

8. It is what they are Small E & Big P

9. Sell side. Its what they do.

10. Sale of company. Also take forever to discuss. Everything's for sale at the right price. I would spend a little (lot) more thinking thinking about what makes SEA more attractive to a potential buyer than the other plethora of opportunities available. In many ways this will end up in
(a) Location
(b) Margin
(c) Size ... Production, 1P Reserves (1P PDP vs PUD), 2P isn't as important in shale IMO, #Drilling locations, net acres
What will become the motivating factor. IMO can not see an E&P of significant size (such as COP, EOG, PXD, APA, APC) and the real majors such as XOM, CVX, BP) being interested ... 21,500 boepd doesn't move the needle and don't forget any acquisition has to have more competitive returns than their existing portfolio. This size might be a useful "bolt-on" to existing operations. This has been cited often in the 10-Qs I read especially when it allows for longer-laterals to gain maximum capital efficiency.

It looks like SN (Sanchez Energy) might be about to bite the dust. SN bought 106,000 net acres (Catarina?) back in May 2014 from Shell for $639M and then a massive $2.3B purchase from APC in Jan 2017 partnering with Blackstone to develop it. Look at who is selling is the point. Not saying majors don't buy, look at BP and $10.5B purchase from BHP a few months back, but size and scope.

More than like different opinions on all 10 of the points raised.