Alta Mesa
Alta Mesa
Alta Mesa shutdown all completions earlier this month. The properties they have are, in my opinion, marginal. They are similar to those that Sandridge was drilling and then stopped. They are on the eastern side of the Stack play (NFX and others are west of them and making good wells). The area Alta Mesa is drilling is shallower and lower pressure and these wells makes too much water and not enough oil and gas. The shake up might bring some financial discipline to the company, but without better acreage I am not sure how far this one can run. We shall see.
Re: Alta Mesa
Correct. If the rock is bad, they cannot fix that problem. However, the numbers don't look too bad. I'm eager to see the year-end reserve report.
Hackett has been able to convince some well respected guys to come onboard.
Hackett has been able to convince some well respected guys to come onboard.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Alta Mesa
Thank you Lealbert. Great info.
For any stocks that are now fallen angels, I always like to go back and understand what indicator may have given a prelude to their decline. There are three metrics I've found to be very good "tells". First is negative operating cash flow in a quarter. In AMR's case, while they had negative operating cash flow in Q1, they just went public and it was something I would have looked past. So this wouldn't have been a good "tell" in this case. Second is Executive Leadership change, but this thing is too new to make any meaningful conclusion either. My last "tell" did highlight something though... SEC filing timeliness... On May 16, AMR received an NT-10Q "Notification of inability to file timely 10-Q" and then another on August 15.
https://www.sec.gov/Archives/edgar/data ... dnt10q.htm
Having been on the filing side for a long time, if a company is consistently filing late, there are two likely causes: 1.) most obvious are cruddy close processes which means management doesn't have timely info, or 2.) some big heady issue that needs research/resolution. In either case, usually best to move on.
Just sharing my lessons learned.
For any stocks that are now fallen angels, I always like to go back and understand what indicator may have given a prelude to their decline. There are three metrics I've found to be very good "tells". First is negative operating cash flow in a quarter. In AMR's case, while they had negative operating cash flow in Q1, they just went public and it was something I would have looked past. So this wouldn't have been a good "tell" in this case. Second is Executive Leadership change, but this thing is too new to make any meaningful conclusion either. My last "tell" did highlight something though... SEC filing timeliness... On May 16, AMR received an NT-10Q "Notification of inability to file timely 10-Q" and then another on August 15.
https://www.sec.gov/Archives/edgar/data ... dnt10q.htm
Having been on the filing side for a long time, if a company is consistently filing late, there are two likely causes: 1.) most obvious are cruddy close processes which means management doesn't have timely info, or 2.) some big heady issue that needs research/resolution. In either case, usually best to move on.
Just sharing my lessons learned.
Last edited by dave_n on Thu Jan 24, 2019 11:04 am, edited 1 time in total.
Re: Alta Mesa
Just so everyone here understands. I am not putting AMR in the Sweet 16 or even our Small-Cap Growth Portfolio. It is just on my Watch List, which means I need several more quarters to confirm assumptions in my forecast/valuation model.
The year-end reserve report (reviewed by a 3rd party engineering firm) is what we need to see next and a reasonable capex program for 2019.
The year-end reserve report (reviewed by a 3rd party engineering firm) is what we need to see next and a reasonable capex program for 2019.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Alta Mesa
The most striking thing about your forecast is that your projected revenue for 2020 is less than the 2018 capital program. For a shale driller that expects half or more of a well’s reserves to be produced in the first 18 months, this is very telling. Either their 4th quarter production is a lot more than you have projected or this one is DOA imho. A long way to go to FCF.
Re: Alta Mesa
Keep in mind that this is a start-up company that just went public in February, 2018. They spent a lot of money on leasehold and a very aggressive drilling program.
What you invest in is totally up to you. I am not recommending AMR, but if you look at the numbers going forward it looks interesting.
This one is all about the new team and what they do from here. Go to their website and read James Hackett's bio. It will give you an idea why it popped up on my Watch List.
Just FWIW:
John Nelson at Goldman Sachs rates AMR a HOLD with a price target of $2.50
Irene Haas at Imperial Capital rates AMR a HOLD with a price target of $6.00
What you invest in is totally up to you. I am not recommending AMR, but if you look at the numbers going forward it looks interesting.
This one is all about the new team and what they do from here. Go to their website and read James Hackett's bio. It will give you an idea why it popped up on my Watch List.
Just FWIW:
John Nelson at Goldman Sachs rates AMR a HOLD with a price target of $2.50
Irene Haas at Imperial Capital rates AMR a HOLD with a price target of $6.00
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Alta Mesa
AMR might have gone public recently, but this company has been around for awhile as a Private Equity company (River Stone). It is difficult to track their history prior to the public filing, but I think they acquired a company that held most of that eastern Stack acreage. Time will tell is this acreage is good enough to develop, service their debt and make a profit.