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14/11/14

09:41

Post #: 14288926
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Originally posted by cmonaussie ↑

HK has a JV with Apollo in the TMS. Really up to Apollo what the next move there would be. Its good that HK can focus on just EFS and Bakken. Overall the TMS production doesn't add much. The question is how many wells needed to grow that 15%-20%.

Gassed you know I'm not by any means a Pathfinder fan. I think are a major hurdles to Pathfinder not the least of which are:

a. Niobrara wellhead price discount to WTI (remember what I said about location risk). Runs about $10/Bbl
b. Infrastructure - gas gathering lines, pipeline hookup and oil pipeline. Some small part is addressed but we are relatively an "outpost" in the Colo. Niobrara. This just adds to costs (both in takeaway and in D&C).
c. Taken together a & b cause big problems for little guys.

No news is generally bad news so I concur with Wabbit. The expectation of a Capital Raising might almost be considered "good defense". Example of Pioneer Natural Resources (major player in Permian) in early Nov selling 5,575,000 shares (about 5%) for $1Billion and selling EFS Midstream for expected $400M. They are making sure their balance sheet can handle potentially prolonged lower oil pricing. They are profitable at $70 oil and have active hedge book.

If I were AKK BoD I would

1. Take a long hard look at Admin and staffing costs and make the adjustments for $70-$80 oil

2. Depending on lease commitments, if it is only 2 Pierre wells to hold Pathfinder, I would drill those so I can hold the 11,000 acres and fully test it. Then go find a JV partner where together it can be reasonably developed and what sort of economics exist (and FFS don't compare it to Wattenberg). Tell the market that you wont be risking capital in an underdeveloped area.

3. Focus on EFS. Tell the market the economics of AKK not HK. Tell us how the JV APO wells are stacking up - what % has been recouped. Project how many months to Payout and at what prices. Let the market know (I am already doing that based on TX RCC) the NRI production and pricing and whether we participate with HK hedges or not. Silence tells me one thing. Announcement will either confirm or adjust thinking. Advise HOW MANY MORE WELLS NEEDED for 100% HBP and how much capital that amounts to.

I don't see a scenario where HK can "outdrill" AKK. HK will be busy trying to figure out how not to lose leasehold acreage in EFS. For them its a HBP strategy first and development pad drilling second. So it depends on where present leases are drilled and what acreage is held.

The talking heads think the bottom is in and around the $70-$75. HH of CLR believes it has bottomed and cashed in his in the money hedges.

Expand

"1. Take a long hard look at Admin and staffing costs and make the adjustments for $70-$80 oil"

I have called for a consolidation of the business units for over a year. Ridiculous for the size of company to have GMs and offices presiding over 40boepd.

They did mention this, but for mine as a business owner, you always try to run admin lean, rather than "trimming" always in emergencies. Means there was always too much fat all along.

But typical ASX listed management style. Not their money

AKK Price at posting: 9.3¢ Sentiment: Hold Disclosure: Not Held
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