Pegulas to buy energy business

[Milanos Milano]

4 minutes ago, Jauronimo said:

I work in transaction services in the energy capital of the world dealing almost exclusively with clients in the energy industry.   But thank you for clarifying the tax structure of a transaction for me while ignoring the financing side of the deal.  Also, thank you for clarifying what acreage and leasehold rights are vs barrels of produced crude.  I thought Pegula was just going around buying warehouses full of gas tanks and barrels of oil!!

 

By the way, depending on the formation wells produce oil, gas, gas liquids, and some other less useful *****.  

 

They are going after developed acreage. Of course they will have to take on some debt, but they don’t appear to be initially going after undeveloped acreage. They want wells already in production. 

Edited August 5, 2020 by IronMaidenBills

[Milanos Milano]

Didn’t East Resources pay out a dividend as well? Pegs takes care of his investors. 

[Jauronimo]

1 minute ago, IronMaidenBills said:

 

They are going after developed acreage. Of course they will have to take on some debt, but they don’t appear to be initially going after acreage. They want wells already in production. 

 

I know what they are targeting since I read the S-1.  They specifically mention a focus on PDP assets (as opposed to PDNP, PUD, and probable) as I already mentioned up-thread.  I also read the part of the S-1 that says they can invest in anything under the sun as they see fit.  

 

If you think PDP is inherently a good investment to the tune of 2x upside then load up on ERESU and wait and see what they ultimately buy. 

 

SPACs I have seen make one big splash.  They aren't PE funds which have the luxury of 10+ year terms over which to deploy capital.  I do not think ERAC is going to be traveling the country "well hunting" for a series of small deals.  I am not sure that is even legal under the structure of the vehicle.

[Milanos Milano]

6 minutes ago, Jauronimo said:

 

I know what they are targeting since I read the S-1.  They specifically mention a focus on PDP assets (as opposed to PDNP, PUD, and probable) as I already mentioned up-thread.  I also read the part of the S-1 that says they can invest in anything under the sun as they see fit.  

 

If you think PDP is inherently a good investment to the tune of 2x upside then load up on ERESU and wait and see what they ultimately buy. 

 

SPACs I have seen make one big splash.  They aren't PE funds which have the luxury of 10+ year terms over which to deploy capital.  I do not think ERAC is going to be traveling the country "well hunting" for a series of small deals.  I am not sure that is even legal under the structure of the vehicle.

 

You are actually right, I just re read some material about SPACs, and I think they must use like 80%+ of the funds on a deal. I think that’s the case, but I’m not a professional when it comes to this. Either way, I think Pegs wants to retain control of his company, I don’t see a merger happening. 

Edited August 5, 2020 by IronMaidenBills

[Milanos Milano]

Old article but totally relevant. 

 

https://www.google.com/amp/s/www.cnbc.com/amp/2019/12/03/distressed-investing-experts-say-crisis-in-oil-patch-is-mounting.html

[Mr. WEO]

1 hour ago, Jauronimo said:

What if the distressed companies sell all their valuable assets but keep their debt for reasons?

 

I wouldn't own stock in that company.

[Milanos Milano]

4 minutes ago, Mr. WEO said:

 

I wouldn't own stock in that company.

 

Why are you guys being so obtuse. These companies aren’t selling their valuable assets just because. They are selling their assets because they need the money to pay creditors. Pegs wants to buy PDP assets. 

[Mr. WEO]

3 hours ago, IronMaidenBills said:

 

These companies, just like Chesapeake Energy had massive amounts of debt. Pegs doesn’t over leverage his companies. He’s smart with his asset management. Initially he’s going for wells that are already in production that are generating free cash flow. 

 

3 hours ago, IronMaidenBills said:

 

He’s very qualified in the oil and gas industry. It’s totally worth the risk to invest in Pegs. I think Terry has said they aren’t looking immediately at undeveloped acreage projects. They want cash flow from wells already in production. The problem is, I haven’t seen very many of those kind of assets for sale within PA. There looks to be some for sale just north of State College. It’s good he’s going after cash flow generating projects initially. I’d like for them to get established and maybe even offer a small dividend to their investors. 

 

2 hours ago, IronMaidenBills said:

 

Again, I’m not sure what they plan on buying. But not to long ago, Diversified Oil and Gas purchased assets from HG Energy (private) that had operating wells. Pegs is looking for private businesses with these same kind of assets. 

 

1 hour ago, IronMaidenBills said:

 

I don’t think they are looking to buying a company outright. They are hunting assets. 

 

Im not saying oil and gas as in production from a well. Of course they aren’t producing both, but it could mean he is looking at oil and gas. Chances are he will focus on gas. 

 

 Do you and "pegs" get together often to discuss the purchasing strategy for his newly formed company?  Sure sounds like you do.  Has he given you a nickname as well?

 

1 hour ago, IronMaidenBills said:

Didn’t East Resources pay out a dividend as well? Pegs takes care of his investors. 

 

Who were his investors and what dividend did that privately held company pay?

 

10 minutes ago, IronMaidenBills said:

 

Why are you guys being so obtuse. These companies aren’t selling their valuable assets just because. They are selling their assets because they need the money to pay creditors. Pegs wants to buy PDP assets. 

 

Reread Jauronimo's post and my answer again.  If you prefer to invest in companies that have sold valuable assets and kept only the debt, go ahead.

 

1 hour ago, TheFunPolice said:

So is the consensus that our top 10 richest NFL owner doesn't know how to run his business?

 

 

 

 

Which business....?

 

[Over 29 years of fanhood]

2 hours ago, Jauronimo said:

What does this have anything to do with the post you quoted?

 

Right, because wells produce oil or gas exclusively and not both and no one in the industry uses the term "oil and gas".

what does being wrong about how he made money have to do with the post I quoted?  I’m not sure it does, nor did I say so. 
 

but this notion that pegs doesn’t know this industry where he bought/sold his way to over 4 billion in wealth is absurd. The whole commodity business is transactional in nature. 
 

That notion that the entire fossil fuel industry is undervalued at present due to unprecedented economic disruption and likely to recover in the next few years is certainly rational and worth an investment. 

Edited August 5, 2020 by Over 29 years of fanhood

[Milanos Milano]

12 minutes ago, Over 29 years of fanhood said:

what does being wrong about how he made money have to do with the post I quoted?  I’m not sure it does, nor did I say so. 
 

but this notion that pegs doesn’t know this industry where he bought/sold his way to over 4 billion in wealth is absurd. The whole commodity business is transactional in nature. 
 

That notion that the entire fossil fuel industry is undervalued at present due to unprecedented economic disruption and likely to recover in the next few years is certainly rational and worth an investment. 

 

Especially considering pegs doesn’t over leverage his companies. One of my biggest pet peeves in investing is a CEO that spends like a drunken sailor, spending money they don’t have. One of the reasons Terry is going to get cheap assets is because of the poor financial decisions of past CEOs. These companies are so over leveraged, they can’t get any more money through traditional routes, so they diluted their shareholders to oblivion. Forced to sell what good assets they have for depressed market prices, just to cover their debt repayments. 

Edited August 5, 2020 by IronMaidenBills

[Milanos Milano]

NG up to $2.20 today. 

[Jauronimo]

1 hour ago, Over 29 years of fanhood said:

what does being wrong about how he made money have to do with the post I quoted?  I’m not sure it does, nor did I say so. 
 

but this notion that pegs doesn’t know this industry where he bought/sold his way to over 4 billion in wealth is absurd. The whole commodity business is transactional in nature. 
 

That notion that the entire fossil fuel industry is undervalued at present due to unprecedented economic disruption and likely to recover in the next few years is certainly rational and worth an investment. 

I never suggested Pegs sold drilling technology like you refuted for some reason and I haven't suggested that he doesn't understand the energy industry. My point in this thread has been that none of you fine folks understand what you're talking about when it comes to the industry and specifically SPACs.

 

If the notion is so rational why is wall street avoiding the industry like the plague?  I guess they just don't like making money.   I've been hearing about how undervalued the whole space is for the past 3 years and how commodity prices are bouncing back next year but its been a slow grind lower every year.  Even among your best in class companies like XOM, PSX, CVX.  Blue chip service companies like SLB and HAL are at 20 year lows.   And this was all before COVID happened too. Anyone remember negative prices on crude futures earlier this year?  The Saudis pivoting their whole economy away from oil production.  Peak Oil supply is dead, now its Peak Demand and many think we are passed that point.  

 

Maybe we will this big shakeout of shale producers and commodity prices will soar again due to declining production.  I doubt it.  The U.S. has doubled its oil and gas production in the last 5 years, Qatar left OPEC to produce gas at will, shale technology has made supply of what we can economically produce much greater.  Demand for gasoline and diesel, which is 40% of the demand for crude, is tepid to down.  The developed world has pledged to go 100% EVs in the next 10 to 20 years so I don't see that improving much.  Battery technology is already here to move away from natural gas peaker plants thanks to Tesla.  Petrochem is the one bright spot I can think of for demand growth in natural gas.  Will it be enough to boost commodity prices enough to realize big time EPS from O&G producers??? I don't know.

 

I will watch ERESU and see what they intend to purchase.  

[Mr. WEO]

3 hours ago, Over 29 years of fanhood said:

what does being wrong about how he made money have to do with the post I quoted?  I’m not sure it does, nor did I say so. 
 

but this notion that pegs doesn’t know this industry where he bought/sold his way to over 4 billion in wealth is absurd. The whole commodity business is transactional in nature. 
 

That notion that the entire fossil fuel industry is undervalued at present due to unprecedented economic disruption and likely to recover in the next few years is certainly rational and worth an investment. 

He didn’t make 4 billion “buying and selling”.  He started a company and sold it.  
 

The caving of natural gas prices has predated COVID

[haroldwaide]

I honestly don't see going 100% EV on the next 10 to 20 years unless charging times are reduced significantly and charging stations become much more plentiful but that's just my opinion.  

 

As for ERESU, my hunch is they have looked at three, possibly four targets to acquire with the hopes of landing 2 of them.  What those specific targets are I can't even begin to speculate, but Terry and Kim don't want a failed business venture to taint there legacy.  You can bet that if they went public with this, they know full well what the next steps are going to be, even if we don't...

[Milanos Milano]

3 minutes ago, haroldwaide said:

I honestly don't see going 100% EV on the next 10 to 20 years unless charging times are reduced significantly and charging stations become much more plentiful but that's just my opinion.  

 

As for ERESU, my hunch is they have looked at three, possibly four targets to acquire with the hopes of landing 2 of them.  What those specific targets are I can't even begin to speculate, but Terry and Kim don't want a failed business venture to taint there legacy.  You can bet that if they went public with this, they know full well what the next steps are going to be, even if we don't...

 

This. I can almost guarantee you the price of NG won’t be below $3 for long. Coal power plants will be converted to NG soon enough, demand will increase. EVs will still need NG for electric. And people will need to heat their homes. NG isn’t going anywhere for the next 30 years. 

[Don Otreply]

4 hours ago, IronMaidenBills said:

 

Most of these posters are just bitter environmentalist. There is nothing wrong with wanting renewables, but these people are completely unrealistic. 

Hey!, I’m a tree hugger ? who is fine with the Pegs doing what they do, renewables will continue to grow as technology improves. What most folk don’t want to hear is that the biggest cause of pollution is all of us individual people rampantly consuming huge quantities of consumer goods to include energy, that rapidly becomes waste/pollution shortly after we purchase our stuff. Just think about how much pollution individual humans create annually, then add it all up,  we are the cause...we demand all the stuff that pollutes our planet. The truth sucks a lot of the time... ? 

 

Go Bills!!!

[Over 29 years of fanhood]

 

25 minutes ago, Jauronimo said:

I never suggested Pegs sold drilling technology like you refuted for some reason and I haven't suggested that he doesn't understand the energy industry. My point in this thread has been that none of you fine folks understand what you're talking about when it comes to the industry and specifically SPACs.

 

If the notion is so rational why is wall street avoiding the industry like the plague?  I guess they just don't like making money.   I've been hearing about how undervalued the whole space is for the past 3 years and how commodity prices are bouncing back next year but its been a slow grind lower every year.  Even among your best in class companies like XOM, PSX, CVX.  Blue chip service companies like SLB and HAL are at 20 year lows.   And this was all before COVID happened too. Anyone remember negative prices on crude futures earlier this year?  The Saudis pivoting their whole economy away from oil production.  Peak Oil supply is dead, now its Peak Demand and many think we are passed that point.  

 

Maybe we will this big shakeout of shale producers and commodity prices will soar again due to declining production.  I doubt it.  The U.S. has doubled its oil and gas production in the last 5 years, Qatar left OPEC to produce gas at will, shale technology has made supply of what we can economically produce much greater.  Demand for gasoline and diesel, which is 40% of the demand for crude, is tepid to down.  The developed world has pledged to go 100% EVs in the next 10 to 20 years so I don't see that improving much.  Battery technology is already here to move away from natural gas peaker plants thanks to Tesla.  Petrochem is the one bright spot I can think of for demand growth in natural gas.  Will it be enough to boost commodity prices enough to realize big time EPS from O&G producers??? I don't know.

 

I will watch ERESU and see what they intend to purchase.  

SPAC concept is pretty simple, I’m not sure who is missing it, but the prospectus is pretty clear and covers what this one is and what it is not and general KPIs of potential acquisition targets they will (and as industry experts have in past acquisitions and operations) center due diligence around. As well as what they expect to be able to do post acquisition.  This isn’t some passive investment play. It’s private equity under a different finance model. 

 

Pegula plus his board of very well Credentialed performers certainly understand the industry well enough to raise hundreds of millions in capital on intent and prior results.  
 

Peak oil and peak demand alarmists we’ve been hearing from for 70 years...  and Tesla batteries and EV cars? Let me know me when just the incremental annual growth in global car sales and automotive energy consumption is covered by EV... 100% in 10 years? I’m laughing... 

 

So in summary, a highly likely rebound in demand in the next 2-3 years from a historic demand dislocation that is presently causing active productive wells to be immediately undervalued and whose operators are looking to sell assets to offset near term price challenges to stay afloat into this weak market.....
 

Terry you dummy, what are you thinking???  don’t you read this guys posts? 

[Over 29 years of fanhood]

24 minutes ago, Mr. WEO said:

He didn’t make 4 billion “buying and selling”.  He started a company and sold it.  
 

The caving of natural gas prices has predated COVID

Please read his bio. He started a company that literally bought, sold and operated assets in the O&G space for several decades. This includes acquisitions and divestitures of land, wells, drilling rights and operations.  4.7 billion of that was selling an operation to shell. 1.75 Billion from another sale. He still owns properties and operations.

Edited August 5, 2020 by Over 29 years of fanhood

[Augie]

5 hours ago, Jauronimo said:

I work in transaction services in the energy capital of the world dealing almost exclusively with clients in the energy industry.   But thank you for clarifying the tax structure of a transaction for me while ignoring the financing side of the deal.  Also, thank you for clarifying what acreage and leasehold rights are vs barrels of produced crude.  I thought Pegula was just going around buying warehouses full of gas tanks and barrels of oil!!

 

By the way, depending on the formation wells produce oil, gas, gas liquids, and some other less useful ***** all at the same time!  Who knew?  

 

So.......what the hell do YOU know???

 

I mean, this is a message board and we want diversity in our opinions! Actual knowledge takes a back seat on the internet. 

[Milanos Milano]

Probably not for sale, but a small little private company called Penn General Energy would be a nice get with their amount of gas wells.