Tuesday, April 14, 2015

Analysis of Comstock Resources



Please read the disclaimer here:http://greedydragoninvestment.blogspot.com/p/about-greedy-dragon.html. Enjoy the article, bitches!




Sup fellow value investing hombres, today I will be analyzing Comstock Resources. The company is a shale oil & gas company. The stock closed at $4.74 per share on Tuesday, which is around the average price I paid for this stock. In 2014, the company primarily drilled wells in the Eagle Ford formation in Texas. Have I ever mentioned that I would really love to live in Texas for a while? If I was a billionaire, I think I would be there right now buying up Eagle Ford acreage, eating barbecue and hopefully dating a nice southern girl. Anyway, let’s get back to business. The following excerpt from the company’s 2014 annual report details its 2015 drilling plans: “As a result of the improved economic returns expected for Haynesville shale natural gas wells, and the fall in oil prices in late 2014 and early 2015, our drilling activity in 2015 will primarily target natural gas in the Haynesville shale.” At current well costs and service costs, the company believes that it can achieve internal rates of return of 27% to 47% on new wells and 40% to 69% on refracs at natural gas prices of $3.00 to $3.50/Mcf. You can refer to slide 10 of the company’s presentation dated 04/06/15 to get a better idea of the economics of the company’s Haynesville wells. The company also has 82,500 net acres prospective for the Tuscaloosa Marine shale play, but drilling has been suspended until oil prices recovers.



Update on the Greedy Dragon portfolio: I recently took a position in Cloud Peak Energy and LRR Energy. I also increased my stake in Natural Resource Partners. Please do your own research before investing in anything.



Comstock Resources’ cost of production was $1.97 per natural gas equivalent (Mcfe) in 2014. I calculated cost of production as the sum of lease operating expenses, gathering & transportation expenses, production taxes and general & administrative expenses. As the company is planning to shift its focus from the Eagle Ford shale to the Haynesville shale for the time being, I won’t be covering the finding and development costs. The lower end of the company’s 2015 production estimates is for 9.5 thousand barrels of oil a day and 145,000 mcf of natural gas a day. According to Comstock’s Q2 2014 earnings call transcript on Seeking Alpha, the company’s realized oil prices averaged 97% of the average WTI price; the company’s realized natural gas prices was 94% of the average NYMEX Henry Hub gas price. The company could realize $4.248 per mcfe based on the lower end production estimates and assuming Monday’s closing price of WTI crude oil of $52.03 and NYMEX natural gas of $2.51 remains constant (assuming also that the company realizes 97% of the WTI price and 94% of the NYMEX natural gas price).


As at December 31, 2014, Comstock Resources had long-term debt of $1.07 billion. This is indeed a significant amount of debt. However, the company has some breathing room as the debt only starts to mature from November, 2018 onwards. It’s unfortunate that the company had no outstanding commodity derivatives as at December 31, 2014.



I was mainly interested in Comstock Resources for its presence in the Eagle Ford as I read some good things about the play. However, if the company’s new Haynesville wells turn out to be as profitable as it believes it to be, it would be like getting Snapchat photos from not one but two girls that you want to get between the sheets with. Thank you for reading. Take care and stay rational.

Sunday, March 29, 2015

Semi-annualish performance report for the period ended March 27, 2015



Disclaimer: There may be errors in my calculations. The purpose of this article is to present the performance of my portfolio. This article does not represent advice to buy or sell any stocks. I may, at any time, sell some or all of the stocks that were presented or appeared in this article. I actually have the intention to sell half of my position in Biostime to raise some cash this week. Maybe I might sell it today. Then again, maybe I might not sell it after all.

Hey guys, I guess it’s time for me to present the Greedy Dragon Portfolio’s performance again. I was definitely not looking forward to calculating the portfolio’s performance this time around. But all things considered, the portfolio didn’t do as bad as I initially imagined. The portfolio gained 1.69% in the 6-monthish period between September 15, 2014 and March 27, 2015. The S&P 500 gained 3.87% in the same period. In my last performance report I said that I wanted to take out Ringgit Malaysia (RM) 50,000 from the portfolio, but it turned out that all I needed was RM 40,000. So, the portfolio’s net value at the start of the 6-month period was RM 197,099.17.



The following table presents my current portfolio:


Purchase price
Current share price
Capital gain/loss
Cumulative dividends per share (after taxes and fees)
Total return
Current value of holding converted to RM
National Bankshares
US$ 35.8 (130 shares)
US$ 29.16
-18.55%
US$ 0.99
-15.78%
13836.42
Banco de Chile
US$ 72.82 (51 shares)
US$ 65.93
-9.5%
US$ 2.74
-5.70%
12272.87
Mercadolibre
Average US$ 93.68 (50 shares)
US$ 122.85
31.14%
US$ 0.08
31.22%
22420.125
First Republic Bank
US$ 46.19 (80 shares)
US$ 56.55
22.43%
US$ 0.026
22.49%
16512.6
National Bank of Greece
US$ 2.95 (700 shares)
US$ 1.27
-56.95%

-56.95%
3244.85
UOA REIT
RM 1.39 (9,000 shares)
RM 1.6
15.11%
RM 0.10
22.30%
14400
Biostime
Average HKD 22.97 (500 shares at HKD 33.85, 500 shares at HKD 25.3 and 1,000 shares at HKD 16.36)
HKD 32
39.31%
HKD 0.05
39.53%
29440
National Resource Partners
Average US$ 9.50 (300 shares at US$11.19 and 300 shares at US$7.8)
US$ 6.85
-27.89%
US$ 0.197
-25.82%
15,001.50
SandRidge Energy
US$1.85 (1,000 shares)
US$ 1.78
-3.78%

-3.78%
6,497.00
Mongolia Growth Group
CAD 1.60 (2,000 shares)
CAD 0.72
-55.00%

-55.00%
4176
Comstock Resources
Average US$ 4.71  (400 shares at US$5.83 and 400 shares at US$ 3.6 )
US$ 3.42
-27.39%

-27.39%
9986.4
Alpha Natural Resources
Average US$1.90  (1,100 shares at $2.23 and 1,000 shares at $1.54)
US$ 0.978
-48.53%

-48.53%
7496.37
Northern Oil & Gas
US$ 6.50(250 shares)
US$ 7.81
20.15%

20.15%
7126.625
Hong Leong Industies
RM 4.4 (1000 shares)
RM 4.45
1.14%

1.14%
4,450

Cash





33561.469
Borrowings





0
  

Notes to table:

Total return excludes transaction cost & forex gains/losses

I just Googled the exchange rates. I have no idea if they’re bid, ask or mid rates. I generally adjust the exchange rates down a little to take into account the spread difference when converting a foreign currency back into Ringgit Malaysia (there’s always the chance that my downward adjustment to the exchange rates is inadequate to reflect my stockbroker’s spread).

For Natural Resource partners and Biostime, the cumulative dividends per share presented underestimate the actual cumulative dividends per share I would have received if I bought my entire position from the start instead of building the position over time. This is the case as I calculate cumulative dividends per share by dividing total dividends received by current number of shares.



The following table presents my portfolio’s return for the period:


Current value of portfolio (less borrowings)
200422.23
Portfolio value as at September 15, 2014
197099.17
Borrowings
0
Portfolio return
1.69%
 
 

The following table presents the stocks I sold during the period:



Purchase price
Price sold
Dividends per share (after taxes)
Total return (excluding transaction cost & forex gains/losses)
Boardroom Limited
SGD 0.63 (7,000 shares)
SGD 0.557 (7,528 shares)
SGD 0.009
-3.49%
Ebay
US$ 50.32 (100 shares)
US$ 54.89

9.08%
KLCC Property
RM 6.09 (2,000 shares)
RM 6.64
RM 0.23
12.81%
Kumplan Fima
RM 2.00 (4,000 shares)
RM 2.05
RM 0.15
10.00%
Tifa Finance
IDR 214.47 (150,000)
IDR 201.55
IDR 8.1
-2.25%
Citizens & Northern
US$ 20 (250 shares)
US$ 19.4
US$ 0.607
0.00%
Uranium Participation
CAD 5.09 (1,200 shares)
Average CAD 5.62 (500 shares at CAD 5.6 and 700 shares at CAD 5.63)
10.41%
  
I might write another article about the fundamentals of my portfolio sometime next month. That article would look into stuff like industry exposure, country exposure, cash flow, etc. So, feel free to check my blog once in a while next month if you’re interested in how I approach portfolio management. Thank you for reading. Take care and stay rational.