Friday, February 27, 2015

Chinese Real Estate Motto

"If you build it they will come."

More Goodrich Petroleum News

  • Capital expenditures totaled $73.4 million in the quarter, of which $68.8 million was spent on drilling and completion costs, $0.8 million on leasehold acquisition and $3.8 million on facilities, capital workovers and other expenditures. For the year, capital expenditures totaled $332.9 million, of which $295.1 million was spent on drilling and completion costs, $23.2 million on leasehold and property acquisitions and $14.6 million on facilities, capital workovers and other expenditures.
  • As previously announced, the Company revised its preliminary capital expenditure budget for 2015 to $90 – 110 million, comprised of $80 – 100 million of drilling and completion capital expenditures and approximately $10 million of leasehold and infrastructure expenditures. The Company will monitor capital expenditures on a quarterly basis and maintain flexibility to accelerate capital expenditures with improvement in oil prices and the monetization of certain assets. Oil-directed capital is estimated to be approximately 91 – 93% of the total drilling and completion budget, with the entire oil-directed allocation to the Tuscaloosa Marine Shale, where the Company is seeing significant reductions in well costs, as authority for expenditures ("AFEs" ) have decreased from approximately $13 million per well in 2014 for single well pads to approximately $10 million per well for single well pads and $9.4 million per well for two well pads. The reduction in well costs is being driven by a reduction in drilling days from approximately 40 days to an average of 26 days (21 – 29 days per well) over the last four wells, and approximately 15 – 20% reduction in service costs. More detail is given in the presentation for the earnings release.
  • For 2015, the Company has a total of 3,500 Bbls/day swapped at an average LLS price of $96.11 per Bbl.
  • Following the sale of the Company's East Texas assets on December 22, 2014, the borrowing base of the Company's first lien credit facility was reduced to $230 million. The Company had $121 million drawn on its first lien credit facility at the end of 2014 resulting in approximately $109 million of available liquidity as the Company entered 2015.
  • The Company has entered into an amendment to its first lien credit facility which extends the term until February 2017, amends the debt to EBITDAX covenant to 2.5 times secured debt to EBITDAX and sets the borrowing base at $200 million, which reduces to $150 million upon closing of the notes offering. The Company expects to finance the remainder of its 2015 capital expenditure budget with cash flow from operations and available capacity on its first lien credit facility.
  • In addition, the Company currently has seven TMS wells drilled and waiting on completion, with plans to begin completion operations on these wells beginning late 1Q'15 through early 2016, pending better market conditions. Since the end of the fourth quarter, the Company has released two rigs, with one active in the TMS.

Goodrich Petroleum Borrows More Money Secured, Issues Warrants

News:

"The Company has entered into a definitive purchase agreement for the issuance and sale of $100 million aggregate principal amount of 8% senior secured notes due 2018 (the 'Second Lien Notes'), together with warrants to purchase up to 4.88 million shares of the Company's common stock at an exercise price of $4.66 per share, a 10% premium to yesterday's closing stock price. The Company has increased its liquidity and has the ability to issue an additional $75 million aggregate principal amount of the Second Lien Notes in the future.

The Company's first lien credit facility maturity has been extended to February 2017, the covenants amended to provide additional flexibility and borrowing base redetermined to $200 million, reduced to $150 million upon closing of the sale of the Second Lien Notes."
A commenter points out,
"So net, net, they got $50MM of liquidity, gave a 2nd lien position and diluted themselves by 10%"
These are the wild, ridiculous capital markets that we live in now. The funny thing is that the unsecured notes seem to be up on the news, even though they just got primed.

Walter Bond Yield Hits Record

A million+ of the 2021 bonds traded yesterday at 12.75; that was a yield to maturity of 76%! That's the 8.5 coupon, so the current yield is 67%! Amazing.

Good Comment On Molycorp Post

A commenter observed:

"At $50M cash burn a quarter they'll be at their $150-200M liquidity requirement by this fall. The $32.5M payment on the 10% notes due December 1 looks like a date to circle on the calendar (actually 30 days after with a grace period)"
Molycorp "earnings" are supposed to be next week.

Tuesday, February 24, 2015

Plant Defenses Against Herbivory: the Carbon Nutrient Balance Hypothesis

Wiki:

"The carbon:nutrient balance hypothesis, also known as the environmental constraint hypothesis or Carbon Nutrient Balance Model (CNBM), states that the various types of plant defenses are responses to variations in the levels of nutrients in the environment. This hypothesis predicts the Carbon/Nitrogen ratio in plants determines which secondary metabolites will be synthesized. For example, plants growing in nitrogen-poor soils will use carbon-based defenses (mostly digestibility reducers), while those growing in low-carbon environments (such as shady conditions) are more likely to produce nitrogen-based toxins. The hypothesis further predicts that plants can change their defenses in response to changes in nutrients. For example, if plants are grown in low-nitrogen conditions, then these plants will implement a defensive strategy composed of constitutive carbon-based defenses. If nutrient levels subsequently increase, by for example the addition of fertilizers, these carbon-based defenses will decrease."

Molycorp Unsecured Debt Yielding Over 200% to Maturity! $MCP

A million+ of the 3.25% 2016 notes traded today at 16.5 - a yield to maturity of 211%!

The 6% 2017 notes have been trading around 16 over the past week. Yield to maturity over 100%.

Notice that the shorter maturity has a higher yield to maturity: inverted yield curve, because  they are trading on expected recovery value.

Also notice that the higher coupon note doesn't have a higher dollar price. That suggests the market doesn't expect too many more coupons to actually get paid.

The stock has rallied and the market cap is back to $222 million!