Micro-Cap E&Ps With Less Risky Businesses [Halliburton Company, Chesapeake Energy Corporation, Baker Hughes Incorporated]

TER: Miller recently sold its assets in Tennessee, and now is exclusively an Alaskan play. What did you make of that move?

PJ: It’s another example of Miller saving some money on selling, general and administrative expense, and consolidating its focus. It started as a Tennessee company, but production there was about 1% of the company’s total production. Shareholders are interested in its Alaskan assets, not Tennessee.

TER: Miller has a nonbinding agreement to buy Buccaneer Energy Ltd.’s (BCGFQ:OTCMKTS) assets in Alaska. How likely is that to happen?

PJ: There’s a good chance that a decent portion of the Buccaneer assets go to Miller. It makes strategic sense. These assets should just fit right in to what Miller does, which would be buying distressed assets. And some of the other major oil companies operating there, like BP Plc (BP:NYSE; BP:LSE), are deemphasizing their Alaskan operations.

TER: What themes do you expect to be dominant in the E&P space in 2015?

PJ: The good old natural gas names might well be the ones to look at in 2015, because time and time again the E&P industry jumps on board the latest trends and might overspend when times are good. I’m not saying times are going to be bad, but witness how some companies—Chesapeake Energy Corp. (CHK:NYSE)Encana Corp. (ECA:TSX; ECA:NYSE), for example—reinvented themselves as liquids-focused. A lot of these companies have track records of doing the exact opposite of what they should have done, in hindsight.

Some of the natural gas names are lower risk. They’re exhibiting stable, long-life production. The Piceance, Marcellus and Pinedale Anticline are areas that fit that model. Those are areas that have low operating costs and low cost of discovery. I don’t follow Ultra Petroleum Corp. (UPL:NYSE), but it fits into two of those plays—the Marcellus and Pinedale.

TER: Thank you for talking with us today, Philip.

Philip Juskowicz, CFA, is a managing director in the research department at Casimir Capital, a boutique investment bank specializing in the natural resource industry. Juskowicz began his career at Standard & Poor’s in 1998, where he was one of the first analysts to recommend Mitchell Energy, credited with discovering the Barnett Shale. From 2001–2005, he worked with a former geologist in equity research at both First Albany Corp. and Buckingham Research. At Buckingham, Juskowicz was promoted to a senior oilfield service analyst position, leveraging his extensive knowledge of the E&P space. From 2006–2010, he was an insider to the oil and gas industry, serving as a credit analyst at WestLB, a German investment bank. In this capacity, Juskowicz was responsible for $500M of loans to energy companies and projects. He earned a master’s degree in finance from the University of Baltimore.

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1) Brian Sylvester conducted this interview for Streetwise Reports LLC, publisher of The Gold Report, The Energy Report, The Life Sciences Report and The Mining Report, and provides services to Streetwise Reports as an independent contractor. He owns, or his family owns, shares of the following companies mentioned in this interview: None.
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3) Philip Juskowicz: I own, or my family owns, shares of the following companies mentioned in this interview: None. I personally am, or my family is, paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: Miller Energy Resources and Taipan Resources Inc. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I determined and had final say over which companies would be included in the interview based on my research, understanding of the sector and interview theme. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.
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