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Constellation Energy Partners, Ltd. Şti. Message Board

  • phprot phprot Feb 5, 2013 12:41 PM Flag

    Cash injection $63 MILLION is DOUBLE market cap

    Excellent transaction announced. This highly profitable microcap is getting a massive injection of $63,000,000 cash from asset sales.

    $5 by closing 2/28.

    Sentiment: Buy

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    • It's not a cash 'injection'.
      They had to sell assets which were (presumably) producing income.
      So they get a lump sum now but less cash flow going forwards.

      And your 'highly profitable micrcap' comment shows that you only discovered this company today - probably on a screen for bid daily percentage moves. They have never been highly profitable and are only a microcap because the price has crashed for the last 4 years.

      I haven't really studied this transaction, however it seems silly to infer that it is a game changer transformation. They had to sell assets because they are so deep in the whole. What's so great about that, even if it does reduce debt issues?

      My main question is what will this do to our 2013 taxes. If they took a book value loss does that mean no extra tax 2013 tax liability for unitholders?

    • No, they are getting an undisclosed amount after subtracting from that 63 mill...all of the lease holders, environmental cleanup, disposal costs, plugging...etc.... That can..has...and usually is...significant. Sell right now.

      • 1 Reply to grgsvll
      • Yes, and that is why there is a provision for over $9M for those things.
        Do not forget that there are hedges that will be monetized at about $9M as well (I believe they are
        not part of the sold assets).
        There will be closing costs (couple of millions probably), but the final number should be a very
        decent one and should give the company the breathing room it needs to look for ways to move
        forward (finally).