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To: Dale Baker who wrote (107491)4/18/2012 3:05:45 PM
From: KaiserSosze
of 118383
 
Spending almost half your market cap on a purchase isn't exactly a bolt-on to me. Gary, take a damn vacation already! :-)

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To: Dale Baker who wrote (107488)4/18/2012 3:11:36 PM
From: KyrosL
of 118383
 
I see a lot of things that would change supply/demand.

Iran may be defused later this year, increasing supply and removing uncertainty.

US gasoline demand keeps dropping. The US net imports are now back to early 90s levels and continue dropping. A serious push for NG for transportation seems to be developing which will accelerate this trend.

China growth is slowing. Especially the heavy oil consuming export sector. Growth in China may be shifting to services and local consumption which depend less on oil.

Europe is in a recession.

Japan may turn on some of its nukes.

Supply from Brazil, Canada, Iraq, Africa and the US is increasing.

Fracking is just starting in China, Latin America, Europe.

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To: Dale Baker who wrote (107491)4/18/2012 3:28:30 PM
From: KaiserSosze
of 118383
 
The more I think about it the more I dislike this acquisition by MHR. I really wonder if Gary isn't being overly reactive to the concerns that they're in too much gas right now, and saw this as a quick response to get more oily (albeit it a very expensive one)?

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To: Jane4IceCream who wrote (107483)4/18/2012 3:29:00 PM
From: Suma
of 118383
 
I only wish that I were a grass hopper. I marry a stock. My trouble and every one I married has fallen into bad times.

I am down so much money from my investing in the inappropriate stocks that it's hard for me to jump for anything......

But thanks for the compliment. I would love to jump for joy.

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From: Paul Smith4/18/2012 3:44:27 PM
of 118383
 
Jefferies - MHR - New Divide County High

BUY

Price target $7.50

Price $6.18

Subash Chandra, CFA*

Equity Analyst

(212) 284-2271 schandra@jefferies.com

Eli Kantor, CFA*

Equity Associate

(212) 284-2357 ekantor@jefferies.com

* Jefferies & Company, Inc.

Key Takeaway

Baytex acquisition represents a new high-watermark in Divide County.

Adjusted valuation estimate of $3,200/acre is up 15% from the previous high

(also set by MHR). Deal will be financed initially with second lien debt. E&D

capex budget set to increase 50% with additional capital to be deployed in

Bakken and Eagle Ford. Marcellus drilling to be cut in half.

New Divide County record...
MHR has announced a potential $311mm acquisition

for Baytex's (BTE, $49.90, NC) 37.5% non-operated WI in 135,000 gross Divide County,

ND acres. Valuation for the undeveloped acreage appears to be roughly $3,200/acre. The

previous Divide County high of $2,800/acre was set in 2011 by two other MHR transactions.

Our $3,200/acre calculation backs out $150mm for existing production/reserves. We use the

average of $126,000 per flowing boe and $21.60/boe for reserves to arrive at the $150mm

marker. The assets include 965 boe/d (93% oil) of production and 8.6 mmboe of proved

reserves.

Deal yet to be finalized...Samson Resources is the operator of the 135,000 gross acre

position and has the option to participate in the transaction. Current working interest is

split 52.5%, 37.5%, and 10% between Samson, BTE, and MHR. Samson appears to have the

right to participate in 84% of the transaction and must make notification within 30 days of

closing. If Samson does not elect to participate, MHR's Williston Basin position would grow

to roughly 125,000 net.

Increasing the capex budget...the 2012 budget is expected to increase by $75mm to

$225mm if Samson does not participate. Under the new plan, Bakken and Eagle Ford capex

will both double to $100mm each. The revised budget assumes 2-3 net Eagle Ford rigs, 1-2

net Tableland rigs, and 2-3 net North Dakota rigs. The Appalachia budget will be cut in half

to $25mm, which includes 3 net Marcellus and 1 net Utica completion. A Weir number will

be finalized following results from the 4 wells slated to come online this quarter.

High yield offering on the horizon...to help fund the acquisition, retire the existing

$100mm term loan, and finance the capex increase, MHR has secured a $450mm second lien

term loan. Issuance of the term loan will reduce the revolver borrowing base by $37.5mm

to $212.5mm. A high yield offering will be used to retire the new term loan once q1'12

financials have been filed. Current liquidity appears to be roughly $200mm, which includes

$100mm of revolver capacity and $100mm of series D preferred stock availability.

Latest Divide County IP rates...culling the state data, recent Divide county peak month

rates from q4'11 and q1'12 appear to range between 50-750 bbls/d. The wide performance

variation does not appear geographically driven as Continental (CLR, $82.65, Hold)

wells in the southeast are averaging a peak month rate of 236 bbls/d, which is similar

to Samson wells in the central and northern areas. SM's (SM, $64.52, Buy) wells are

consistently solid with peak month rates averaging 480 bbls/d. The company's acreage lies

on the Canadian border in the northern portion of the County. Baytex operated wells are

also in north Divide, but average just 50 bbls/d.

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To: Dale Baker who wrote (107491)4/18/2012 3:55:53 PM
From: tom pope
of 118383
 
I've noticed Gary having lunch at the Petroleum Club with Aubrey recently.

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To: Paul Smith who wrote (107496)4/18/2012 3:57:13 PM
From: KaiserSosze
of 118383
 
Great, so their 12 month target is where we were trading about a month ago. :-(

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From: JSB4/18/2012 4:08:46 PM
of 118383
 
Maybe Gary should stop telling us what he does? Exceeds production
estimates, stock goes down. Raise next years estimates, stock goes
down. Hedge oil at wti plus 10 bucks, stock goes down. Several analysts
raise price target, stock goes down. Cramer the mouth makes us his
number one speculative pick, stock goes down. GMAFB

I've never seen one stock do so well in execution and still get hammered
day in an day out. I know there are some really crappy companies with
better price performance.

I know, patience, though being down 30% since this time last year is
really starting to rag on my patience level.

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To: Dale Baker who wrote (107491)4/18/2012 4:08:59 PM
From: Suma
of 118383
 
And I am riding in the rumble seat.. OUCH

For those of you who don't know what this is you have missed out on a lot of fun in your lives.

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To: Suma who wrote (107500)4/18/2012 4:17:55 PM
From: tom pope
of 118383
 
As in?


I get the neck of the chicken 
I get the rumble seat ride
I get the leaky umbrella
Everyone shoves me aside

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