Author Topic: SD - SandRidge Energy  (Read 449525 times)

Sombunall

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Re: SD - SandRidge Energy
« Reply #1720 on: November 21, 2018, 10:36:50 AM »
In case you missed it:

http://adventuresincapitalism.com/2018/11/18/40-less-carl-paid/

Seems attractive -- no debt, Icahn controls it and you can buy it for a lot less than he did.




samwise

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Re: SD - SandRidge Energy
« Reply #1721 on: January 10, 2019, 06:27:52 PM »
This seems to be cheapest oil and gas stock I can find versus pv-10 or standardized measure for both 2016 and 2017. It has no debt and a financial owner who won't pursue growth rates like most oilmen.

So even at the low SEC prices of 2016 you have a bargain. It's also cheaper than the recent private bids , although the oil price decline might mean you can't get those bids right now.

According to the guys at VIC, you are getting >30% yields on developed and producing wells. But of course they are spending the cash flow on drilling their other fields.

I thought this was a gas company until I saw their revenue split. Most is oil and NGL. So they should do well with a rebound in oil or gas prices, or a private sale, or by developing their other basins and then selling. Or they could waste all cash flow in new basins that are uneconomical.

Spekulatius

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Re: SD - SandRidge Energy
« Reply #1722 on: January 10, 2019, 07:15:00 PM »
They tried to sell themselves and only got bids for $13/ share and that was when the price of crude was higher. I agree it looks cheap, but why are informed industry insiders not bidding more?
To be a realist, one has to believe in miracles.

samwise

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Re: SD - SandRidge Energy
« Reply #1723 on: January 10, 2019, 08:14:42 PM »
Good question. I don't know what those investors were underwriting. One possible cause I know of is: At the time of the bids there was an overhang on their Colorado assets due to some upcoming public vote. That has since been resolved.

In the same vein: Why are informed public markets energy investors not bidding more? Pessimism, fund outflows from energy, sales by those looking for a quick deal (the VIC author), oil prices falling, take your pick. Markets are inefficient and that includes private markets.

Are energy insiders and private equity guys the best capital allocators? Should I trust their valuation or the standardized measure? How does one independently value an upstream E&P company? My answer is reserves and the standardized measure (adjusted for commodity prices if you are smart enough to do that).

If they put current producing assets in a trust, they should generate a good yield and IRR. The fact that they are trying other options means they think they can do even better. In normal E&Ps that means better for management, but since Icahn is in control I think this means better for shareholders.

Also note that they did not accept the bids. One definition of intrinsic value is a price where two well informed participants agree to a deal.


Gregmal

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Re: SD - SandRidge Energy
« Reply #1724 on: January 10, 2019, 08:34:38 PM »
This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this.

SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off.

given2invest

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Re: SD - SandRidge Energy
« Reply #1725 on: January 10, 2019, 09:49:55 PM »
This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this.

SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off.

A+ post.  Basically sums it up.   I've been looking at this for months (I know nothing about E&P/Oil/Gas but I'm a sucker) and I come up with the same things whenever I consider buying:

A very robust auction yielded shit bids when Oil was much higher & I can buy much more liquid interesting E&P stocks now that didn't have a robust auction that yielded shit bids.  I don't think the CO vote means much because the stock barely moved the next day.

Even the way they reported the result of the auction was sketch with a range of indicative values.  I mean nobody wanted these assets. 

samwise

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Re: SD - SandRidge Energy
« Reply #1726 on: January 11, 2019, 07:59:56 PM »
Happy to agree it's a POS in terms of history of prior management, quality of Mississippi Lime assets, previous leverage levels, post bankruptcy behaviour etc etc.

All previous investors have been burned and scarred. It's an impressive list : Prem Watsa, Icahn is underwater and so is almost everyone who has posted in the 200 pages before this and didn't sell opportunistically. I'm underwater too.

But does this POS have a price, a fair value? How does one estimate value here?

Btw why is this a melting ice cube? They grew production last quarter. Not that I have anything against a liquidation that delivers value.


meiroy

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Re: SD - SandRidge Energy
« Reply #1727 on: January 11, 2019, 08:56:14 PM »

I bought quite a lot of this in December.  I'm wondering why Icahn has been so quiet.

Spekulatius

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Re: SD - SandRidge Energy
« Reply #1728 on: January 11, 2019, 09:17:12 PM »
This is simple. Excuse me for not using charts or presenting detailed analysis, but SD can effectively, and simply be summed at as this.

SD for the better part of its existance, was a perpetual piece of shit and f***ed every shareholder that touched it. Now, it is simply a mediocre, melting ice cube that trades below its likely NAV. Thats not enough to get people interested. Especially after December's sell off.

Probably the best answer to my question above. I have to give SD cudos for having a good balance sheet and GAAP profits, so there is that. But the E&P business is messed up. I used to do way more in this field, but noticed that share revolution really messed up this field in terms of capital allocation and consider it uninvestable. My thinking regards to SD is that if they got so poor bids when the price of crude was much higher and the capital markets much more apprehensive, that I have not business betting these folks are all wrong and I am right buying in this. Sure, there is a right price for everything. When this stock trades at a PE of 6x and a FCF yield of 10%, I am going to take a look. until then, one is better of just sticking with the majors or the large Canadian long life oil sand plays perhaps. At least the majors understand capital allocation and pay dividends.
To be a realist, one has to believe in miracles.

samwise

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Re: SD - SandRidge Energy
« Reply #1729 on: January 12, 2019, 07:11:40 PM »

I bought quite a lot of this in December.  I'm wondering why Icahn has been so quiet.

The company is looking for a new CEO. If you listen to Icahn's interviews, that's his method: get a good operator to run things, but keep control of capital allocation. Since capital allocation is the big risk here, as Spekulatis rightly pointed out, that's a good situation for minority investors.

I don't think Icahn will spend much mindshare here. This is a small company compared to his 20B reported portfolio. Good thing is they can't resist him like AIG did.