Stock Alert for Delta Petroleum Corp. (DPTR)
  • Stock Alert for Delta Petroleum Corp. ($DPTR)
  • Stock Alert for Delta Petroleum Corp. (DPTR)
  • " />

    Stock Alert for Delta Petroleum Corp. (DPTR)

    Delta Petroleum Corp. (DPTR) is an independent oil and gas company engaged primarily in the exploration for, and the acquisition, development, production and sale of, natural gas and crude oil. Delta operates in two business segments: acquisition, exploration, development, and production of oil and natural gas properties and related business activities, and contract oil and natural gas drilling operations. The primary areas of activity are in the Rocky Mountain and Gulf Coast Regions with additional unproved exploratory leaseholds in the Columbia River Basin in southeastern Washington, the Hingeline area of central Utah, and the Haynesville Shale area of Texas, among others. Total oil and gas leasehold is approximately 813,000 acres.

    DPTR was founded in 1984 and is based in Denver, Colorado.

    Share Statistics (Jul-26-10) FY

    2007

    FY

    2008

    %

    Chg

    Q4 2008 Q4 2009 %

    Chg

    Symbol DPTR Revenue, $Mn 151.3M 271.2M 79.2% 53.54M 34.18M 36.2%
    Current price $0.87 Gross marg. 61.5% 67.0% 8.9% n/a 56.3% n/a
    52wk Range: $4.68-0.67 Oper. margin -57.1% -171.3% 200.0% n/a -40.1% n/a
    Avg Vol (3m): 82,450,000 Net margin -99.0% -168.2% 69.9% n/a -99.7% n/a
    Market Cap. 251.34M
    Shares Outst. 282.8M EPS, $ -2.66 -4.74 78.2% -4.56 -0.12 97.4%

    Source: Reuters.com, SEC Filings.

    Financial Summary

    As previously announced on March 18, 2010, DPTR entered into a non-binding letter of intent with Opon International LLC to sell a 37.5% non-operated working interest in the Vega Area assets located in the Piceance Basin for total consideration of $400 million and to issue Opon warrants to purchase 13.3 million shares of Delta common stock at $1.50 per share and 5.7 million shares at $3.50 per share. The consummation of the transaction is contingent upon Opon’s ability to arrange financing and is subject to customary due diligence, negotiation and execution of definitive binding agreements.  The parties are continuing with the proposed transaction and the Company understands that Opon’s financing efforts are ongoing.

    At March 31, 2010, the Company had $10 million in cash and $52.0 million available under its credit facility (based on the redetermined $145 million borrowing base described below).

    On April 26, 2010, DPTR entered into the Third Amendment to the Second Amended and Restated Credit Agreement (as amended, the “Credit Agreement”), with JPMorgan Chase Bank, N.A., as agent, and certain of the financial institutions that are party to its credit agreement in which, among other changes, the lenders provided a waiver of Delta’s violation of the quarter ended March 31, 2010, capital expenditures limitation of $10.0 million.  In conjunction with the Amendment and as part of a scheduled redetermination, the borrowing base was reduced from $185.0 million with a $20.0 million required minimum availability to $145.0 million with no required minimum availability for a net reduction in the borrowing base of $20.0 million.  The next scheduled redetermination date is July 1, 2010.  In addition, the Amendment imposed capital expenditures limitations of $20.0 million for the quarter ending June 30, 2010, and $15.0 million for the quarter ending September 30, 2010, provided that any excess of the limitation over the amount of actual expenditures may be carried forward from an earlier quarter to a subsequent quarter. The Company was in compliance with the accounts payable covenant under its credit facility at March 31, 2010.

    On April 1, 2010, DHS Drilling amended its credit facility with Lehman Commercial Paper Inc. and renegotiated certain terms of the agreement.  The only financial covenant remaining in the DHS credit agreement is a minimum EBITDA covenant.  The interest rate has been adjusted to LIBOR plus 625 basis points, subject to a LIBOR floor rate of 2.75%.  DHS was in compliance with its amended minimum EBITDA covenant for the quarter ended March 31, 2010.

    First-Quarter Results

    For the quarter ended March 31, 2010, the Company reported production of 5.0 billion cubic feet equivalents (“Bcfe”), a decrease of 20% when compared with the first quarter of 2009.  The production decrease was mostly related to expected production declines in the Rockies that have not been offset by additional drilling.  Total revenue decreased 25% to $44.0 million in the quarter, versus revenue of $58.7 million in the quarter ended March 31, 2009, primarily related to a $31.3 million gain associated with the offshore California litigation in 2009, partially offset by a $12.3 million quarter-over-quarter increase in oil and gas sales.  For the quarter ended March 31, 2010, oil and gas sales increased 55% to $34.5 million, as compared to $22.2 million for the prior year period.  The increase was primarily the result of a 125% increase in oil prices and an 86% increase in natural gas prices, partially offset by the 20% decrease in production. The average oil price received during the quarter ended March 31, 2010, increased to $70.78 per Bbl compared to $31.44 per Bbl for the prior year period.  The average natural gas price received during the quarter ended March 31, 2010, increased to $5.70 per thousand cubic feet (“Mcf”) compared to $3.07 per Mcf for the prior year period.

    The Company reported a first-quarter net loss attributable to common stockholders of ($12.8 million), or ($0.05) per share, compared with a net loss attributable to common stockholders of ($25.6 million), or ($0.25) per share, in the first quarter of 2009.

    Lease Operating Expense. Lease operating expenses for the quarter ended March 31, 2010, decreased to $8.2 million from $9.8 million in the prior year period primarily due to the 20% decrease in production.

    Transportation Expense. Transportation expense for the quarter ended March 31, 2010, was $3.9 million, comparable to prior year costs of $3.3 million, but increased 53% from $0.51 per Mcfe to $0.78 per Mcfe.  The increase on a per unit basis is primarily the result of changes to the Vega gas marketing contract that went into effect in October 2009 whereby the gas is processed through a higher efficiency plant.  The Vega gas marketing contract has resulted in higher revenues in the Vega area from improved natural gas liquids recoveries and a greater percentage of liquids proceeds retained.

    Depreciation, Depletion, Amortization and Accretion – Oil and Gas. Depreciation, depletion and amortization expense decreased 14% to $23.2 million for the quarter ended March 31, 2010, as compared to $26.8 million for the prior year period. Depletion expense for the quarter ended March 31, 2010, decreased to $22.5 million from $26.1 million for the quarter ended March 31, 2009, due to lower production volumes partially offset by an increase in the per unit depletion rate.  The depletion rate increased from $4.13 per Mcfe for the quarter ended March 31, 2009, to $4.46 per Mcfe for the current year period primarily due to non-operated Piceance reserve revisions made in the second quarter of 2009 to reduce proved developed reserves based on well performance.

    General and Administrative Expense. General and administrative expense decreased 10% to $11.4 million for the quarter ended March 31, 2010, as compared to $12.6 million for the comparable prior year period.  The decrease in general and administrative expenses is attributed to reduced staffing as a result reductions in force during the first half of 2009 resulting in lower cash compensation expense, partially offset by costs associated with the strategic alternatives evaluation process and by increased non-cash stock compensation expense related to restricted stock granted in December 2009.

    Financial Strength (Jul-26-2010) Company Industry Sector S&P 500
    Quick Ratio (MRQ) 0.40 3.18 0.91 0.74
    Current Ratio (MRQ) 0.41 3.29 1.25 0.88
    Long-Term Debt to Equity(MRQ) 51.65 20.55 56.77 111.99
    Total Debt to Equity (MRQ) 77.61 23.36 72.42 175.33

    Source: Reuters.com, SEC Filings.

    Analyst Consensus

    This is the consensus forecast amongst 5 polled investment analysts. Against the Delta Petroleum Corp company.

    Analyst Detail Buy Outperform Hold Underperform Sell No Opinion
    Latest 0 0 2 3 0 0
    4 weeks ago 0 0 2 3 0 0
    2 months ago 0 0 2 3 0 0
    3 months ago 0 0 2 3 0 0
    Last year 0 0 4 2 2 0

    The one analyst offering a 12-month price target expects DPTR share price to rise to 1.40 in the next year from the last price of 0.80.

    Source: www.ft.com

    Consensus Estimates Analysis

    # of Estimates Mean High Low 1 Year Ago
    SALES (in millions)
    Quarter Ending Sep-10 3 31.64 33.65 29.00
    Quarter Ending Dec-10 3 31.40 34.06 28.00
    Year Ending Dec-10 4 138.51 158.00 115.00 173.00
    Year Ending Dec-11 4 155.37 176.00 130.00
    EARNINGS (per share)
    Quarter Ending Sep-10 5 -0.08 -0.04 -0.11 -0.06
    Quarter Ending Dec-10 5 -0.09 -0.04 -0.12 -0.05
    Year Ending Dec-10 7 -0.38 -0.21 -0.46 -0.23
    Year Ending Dec-11 7 -0.31 -0.21 -0.42
    LT Growth Rate (%) 2 -5.00 4.00 -14.00 28.00

    Source: http://www.reuters.com/finance/stocks/financialHighlights?symbol=DPTR.O

    Investment Highlights

    DPTR recently announced that it has entered into a Purchase and Sale Agreement (PSA) with Wapiti Oil & Gas L.L.C. (Wapiti) to sell various non-core assets for $130 million.  The parties expect to consummate the transaction in August.

    The non-core assets to be sold to Wapiti include all of DPTR’s 31% working interest in the Garden Gulch field of the Piceance Basin in Colorado, all of its working interest in the Baffin Bay field of Texas, all of its interest in Piper Petroleum, half of its working interest in its DJ Basin fields, as well as half of its working interest in the following fields in Texas: Caballos Creek, Choke Canyon, Midway Loop, Newton and Norian.  DPTR also will sell to Wapiti its working interest in its acreage positions in the DJ Basin of Wyoming, Colorado and Nebraska; and other acreage in south Texas.  Along with the sale of the working interests, DPTR has agreed to allow Wapiti to operate the Newton and Midway Loop fields, as well as the other fields of Texas of which it was the operator.

    Morgan Stanley and Evercore acted as financial advisors to DPTR in connection with this transaction.

    The Company also announced that it signed a new amendment to its credit agreement of its senior credit facility.  According to the new amendment and upon the closing of the transaction, its borrowing base will be reduced to $35 million.  Additionally, the amendment permits the Company to spend up to $28 million in capital expenditures for the third and fourth quarter 2010.

    DPTR recently announced that Carl Lakey has been named CEO, effective immediately.  Lakey most recently served as senior vice president of Operations for DPTR and has been with the Company since 2007.

    Prior to joining Delta Petroleum, Lakey spent six years managing operations at El Paso Production

    Company and 16 years in various operational and technical positions at ExxonMobil.

    In addition, DPTR announced that it has terminated discussions to sign a definitive Purchase and Sale Agreement with Opon International LLC to sell a 37.5% non-operated working interest in, and jointly develop, its Vega Area assets in the Piceance Basin. DPTR terminated the discussions after Opon was unable to obtain financing for the transaction on the agreed-upon terms. DPTR will continue to pursue disciplined development of its main asset in the Piceance Basin to bolster proved reserves. In the Vega Area, DPTR is taking a balanced approach to employing new procedures that are improving completion results while preserving liquidity. DPTR is also continuing to pursue strategic alternatives to enhance shareholder value.

    Operations Update

    Piceance Basin, CO, 31% – 100% WI – Current production from the Piceance Basin approximates 34 million cubic feet equivalent per day (Mmcfe/d) net.  During the first quarter 2010 the Company completed three wells from its drilled and uncompleted inventory in the Vega Area.  The Company expects to complete the remaining 16 drilled and uncompleted wells in 2010 utilizing its redesigned completion techniques.  Additionally, the operator of Garden Gulch has a one rig drilling program ongoing.

    Source: http://www.deltapetro.com/

    Technical Analysis

    Source: http://stockcharts.com

    DPTR is trading near its upper Bollinger Band. This suggests that the stock price is high relative to its recent price action.

    DPTR’s MACD is currently indicating a weak bullish signal. Although the MACD is trending above the signal line, the indicator is still below zero, which suggests that the underlying moving averages are bearish.

    Comparative Analysis

    Company Name Ticker Price per Mrkt. Cap. P/E P/S
    Jul26-2010 symbol Share, $ $ Mn 2010 2011 2010 2011
    Warren Resources Inc. WRES 3.18 225.19M n/a n/a 3.22 n/a
    Gastar Exploration Ltd. GST 3.99 201.09M 1.65 n/a 5.70 n/a
    GeoResources Inc. GEOI 15.26 300.99M 17.64 n/a 3.38 n/a
    Oil & Gas Operations Median 242.42M 9.64 n/a 4.10 n/a
    Delta Petroleum Corp. DPTR 0.87 251.34M n/a n/a 1.21 n/a

    Source: Thomson Financial

    Insider Trading Activity

    NET SHARES PURCHASE ACTIVITY

    Inside Purchases – Last 6 Months

    Shares Transaction
    Purchases n/a 0
    Sales n/a 0
    Net Shares Purchased (Sold) n/a 0
    Total Insider Shares Held 103.32M n/a
    % Net Shares Purchased (Sold) 0% n/a

    Net Institutional Purchases — Prior Qtr to Latest Qtr
    Shares
    Net Shares Purchased (Sold) (23,144,600)
    % Change in Institutional Shares Held (86.93%)

    Source: Yahoo Finance

    DO NOT BASE ANY INVESTMENT DECISION UPON ANY MATERIALS FOUND ON THIS REPORT. We are not registered as a securities broker-dealer or an investment adviser either with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority.  We are neither licensed nor qualified to provide investment advice.

    The information contained in our report should be viewed as commercial advertisement and is not intended to be investment advice.  The report is not provided to any particular individual with a view toward their individual circumstances. The information contained in our report is not an offer to buy or sell securities.  We distribute opinions, comments and information free of charge exclusively to individuals who wish to receive them.

    Our newsletter and website have been prepared for informational purposes only and are not intended to be used as a complete source of information on any particular company.  An individual should never invest in the securities of any of the companies profiled based solely on information contained in our report.  Individuals should assume that all information contained in the report about profiled companies is not trustworthy unless verified by their own independent research.

    Any individual who chooses to invest in any securities should do so with caution.  Investing in securities is speculative and carries a high degree of risk; you may lose some or all of the money that is invested.  Always research your own investments and consult with a registered investment advisor or licensed stock broker before investing.

    Information contained in our report will contain “forward looking statements” as defined under Section 27A of the Securities Act of 1933 and Section 21B of the Securities Exchange Act of 1934.  Subscribers are cautioned not to place undue reliance upon these forward looking statements.  These forward looking statements are subject to a number of known and unknown risks and uncertainties outside of our control that could cause actual operations or results to differ materially from those anticipated.  Factors that could affect performance include, but are not limited to, those factors that are discussed in each profiled company’s most recent reports or registration statements filed with the SEC.  You should consider these factors in evaluating the forward looking statements included in the report and not place undue reliance upon such statements.

    We are committed to providing factual information on the companies that are profiled.  However, we do not provide any assurance as to the accuracy or completeness of the information provided, including information regarding a profiled company’s plans or ability to effect any planned or proposed actions.  We have no first-hand knowledge of any profiled company’s operations and therefore cannot comment on their capabilities, intent, resources, nor experience and we make no attempt to do so.  Statistical information, dollar amounts, and market size data was provided by the subject company and related sources which we believe to be reliable.

    To the fullest extent of the law, we will not be liable to any person or entity for the quality, accuracy, completeness, reliability, or timeliness of the information provided in the report, or for any direct, indirect, consequential, incidental, special or punitive damages that may arise out of the use of information we provide to any person or entity (including, but not limited to, lost profits, loss of opportunities, trading losses, and damages that may result from any inaccuracy or incompleteness of this information).

    We encourage you to invest carefully and read investment information available at the websites of the SEC at http://www.sec.gov and FINRA at http://www.finra.org.

    Leave a Reply

    Your email address will not be published. Required fields are marked *