|chinaman - Montag, 12. Februar 2007 - 12:43|
| Für mein Musterdepot ordere ich 300 Stk. Bronco Drilling mit einem Limit von 15,75 USD an der Nasdaq. WKN: A0F41J |
|chinaman - Montag, 12. Februar 2007 - 16:01|
| Ausgeführt zum Eröffnungskurs von 15,55 USD (15:30 Uhr MEZ). |
Montag, 12. Februar, 2007
15.55 US Dollar = 11.95832 Euro
|chinaman - Mittwoch, 14. Mai 2008 - 20:17|
| Position wird zum aktuellen Kurs von 17,50 USD an der Nasdaq glattgestellt. |
|chinaman - Mittwoch, 14. Mai 2008 - 20:20|
| Wednesday, May 14, 2008 |
17.50 US Dollar = 11.29 Euro
|laurin - Freitag, 16. Mai 2008 - 03:29|
| Gruss - Laurin |
Byron King of Outstanding Investments re Bakken play
sell on Bronco drilling
An OI Sell -- Bronco Drilling (OI has a buy on TGA)
Bronco Drilling Co. Inc. (BRNC: NASDAQ) provides contract land drilling and workover services to oil and natural gas exploration-and-production companies. Headquartered in Edmond, Okla., Bronco has a great in-house capability to repair and refurbish land rigs. This alone ought to be an advantage at a time of rampant capital cost inflation in the energy industry.
Bronco has been in the OI portfolio for about a year and a half. But in January 2008, the stock was trading down near $13 per share. Then Allis-Chalmers Energy made a friendly bid for Bronco. The stock popped up to about $15 per share and has appreciated to over $17 in recent days -- an 8% gain from when we first recommended it.
So Bronco has underlying value. At least Allis-Chalmers thinks so. At one press conference, the CEO of Allis-Chalmers said that he thought that Bronco was "a steal."
I’m glad we waited for the appreciation of the past two months or so. But I believe it is time to dismount from this pony and sell Bronco. Leave Bronco to Allis-Chalmers and let’s move on to other things.
The Reason to Sell Bronco
These are salad days for land drilling industry. There are more rigs drilling more wells than at almost any time in history. Yet Bronco has been trading below book value. And Bronco recently released some very underwhelming results for the first quarter of 2008.
Revenues at Bronco were $62.3 million, compared with $69 million for the fourth quarter of 2007 and $78.9 million for the first quarter of 2007. Net income for the first quarter of 2008 was $8.1 million, compared with $6.4 million for the previous quarter and $11.4 million for the first quarter of 2007. That’s the wrong direction.
Bronco’s fully diluted earnings per share for the quarter (ending March 31, 2008) were 31 cents. This compares with fully diluted earnings per share of 25 cents for the previous quarter and 44 cents for the first quarter of 2007. Again, things are going in the wrong direction.
There is a smidgen of good news. After the end of the first quarter, Bronco signed three term contracts to move rigs to the Bakken Shale play in North Dakota. The Bakken is supposed to be the "next big thing" in U.S. energy exploration. And Bronco anticipates signing a fourth rig contract for the Bakken in the near future. Drilling the Bakken play represents a new operating region for Bronco.
A long time ago, when I was working with Gulf Oil Co. (it seems like back in the Pliocene epoch), we worked in the Williston Basin of North Dakota. Gulf had some great success in the Williston area. Some of the work that I did involved reviewing the Bakken Shale.
The Bakken was "noncommercial" for Gulf with the technology back then. Sure, things have changed over the years. But the thing to keep in mind is that Bakken plays involve directional drilling in fractured shales.
Yes, the Bakken makes for a great story. There is definitely some good potential for new oil discovery in the Bakken. And the Bakken will make a lot of money for some companies that have the human expertise and advanced technology to get it right. But I assure you that the Bakken is not everything that the press releases make it out to be.
There will be a lot of frustration in the Bakken over the next couple of years. There will be a lot of dry holes, failed wells and lost investment. There is no cookbook approach to exploiting the Bakken. This is fourth- and fifth-generation drilling and extraction technology, at the frontiers of unconventional oil. You have to really know the geology, the engineering and the technology to make things work in the Bakken. And you have to be lucky, which always helps in the oil business.
So as far as I am concerned, the Bakken will not be the salvation for Bronco. And meanwhile, Bronco received a takeover offer. So let Allis-Chalmers (an oil service company) sort out the management issues of land drilling.
In the meantime it’s time to take your money off the table – and bag an 8% gain…
Action to take: Sell Bronco Drilling Co. Inc. (BRNC: NASDAQ).
That’s all for now.
Until we meet again…
Byron W. King