Dear Nawaar, you said:
"Average: 54% NG – $57.8K per flowing barrel (68.6% of NAV)
At the per flowing barrel valuation Equal would trade at $11.9 per share
At 68.6% of NAV valuation Equal would trade at $5.5 using $8 as a base NAV
A blind between those two would give us $8.7
Currently Equal trades at $26K per flowing barrel, and 37% of NAV, no company with 50% liquids and 2.4 CF (Mississippian adjusted) trade at such metrics. None. As a matter of fact Perpetual with 9 times debt to cash flow and 90% NG production trades at a better NAV valuation to us, and almost the same on per flowing barrel.
How do you calculate this 26K per boepd ?
EQU has a production of 10000 boepd currently.
So you say that EQU has a 260 M $ market cap currently.
However EQU has a cap of 105 M $ currently.
What is the remaining 160 M $ that you calculate ?
Is it the long term debt?
The long term debt was 180 M $ (convertible included) as of DEC 2011 though.
We suffer now in the market from the perception of being highly levered with flat production for 2012. There is no positive catalyst for the stock in management's present course of slow de-leveraging, minimal drilling outside the JV on the legacy properties and depending upon the JV to show us something positive in the fall. Do we lie here at $2.50-3.00 until October 1, Mr. New Chairman, or not?
We already understand the course Don Klapko has chosen for us--steady as she goes. There is no downside to conducting a strategic review. Macquarie has just completed one for NiMin Energy. The comps and bids for oily assets are very fresh in that shop. Please use them or somebody else's. Rearranging the chairs on the bridge is only a starting point and must be accompanied by a course change.
Thanks for your support, I got your email and added you to the list. I am also glad to report that as of today we have the support of 45 private shareholders presenting 2.45m shares (including my stake) or %7.02 of the outstanding shares, further more if we include the number of institutional shares that have expressed support for change, the total would rise to 5.95 million shares or 17.04% of the outstanding shares. All this has been achieved through message boards postings, phone calls and few articles on Seeking Alpha, I can't imagine how much support we would get if this process was to move to an official proxy contest with a professional public relations campaign. This management team has absolutely no support, out of the all the parties I spoke to, only 1% showed some "sympathy" to the current team.
If Equal management does not proceed with an immediate strategic review and proceed to implement a radical change of strategy, or possibly a full liquidation of the company assets, they will have a major revolt in May 11th; what they hell are they going to tell investors to defend their position with the stock trading in the $2s? ... This is getting ridiculous indeed, especially when we factor that the company assets can easily fetch $7 a share.
Count me among your supporters. On my proxy I voted to withhold on all board members. I am hopeful they (the board) will get the message from shareholders and move in the direction you are espousing. 4,000 shares
The following barrel value is calculated through dividing the enterprise value / production.
Equal Enterprise value is:
Debt : 165m - 18m (Miss. deal) = $147m
Market cap: $104m
Production range estimates for this year 9500 to 9800 (excluding the Mississippian). I used 9700 as an average in my calculations:
251m / 9.7K = $25.8K per flowing barrel.
Again, no company with 50% liquids trade at such number, I never heard, seen or came across a company trading at such a low multiple. The minimum we should be trading at $40K per flowing barrel, that would be about $7 a share.
I wouldn't be surprised if someone took a run at Equal, the current valuation is ridiculous, only management refuses to see it.
Thank you very much nawaar.
I found CMT.TO that trades at 17000 $ per boepd. Check their presentation at their website to make your calculations too.
CMT.TO (Compton) had 84% natural gas-16% oil and liquids in dec 2011, 13000 boepd production and they move to the oil and liquids this year. They have big undeveloped land in the oily Montana Bakken too.
CMT.TO has annual cash flows around 15 M $ - 20 M $ for 2012 (based on their Q1 2012 cash flow) and these CF are 9 times their debt. However they trade even lower than PMT (Perpetual) that has 23K $ per boepd. So CMT.TO is the cheapest one I have found.
The new mgmt team looks promising too.
I still check whether I miss sth on that.