The current trading/drifting on low volume is quite meaningless for Equal; there has been some additional weakness of late due to the negativity in the market and further erosion in a number of commodities; however the real deal is the progress of the review process and what a buyer (buyers) is welling to pay for Equal assets.
The two most probable outcomes are: a full liquidation, possibly in the $5s/$6s range - this range is a bit lower than the $7s range reflecting the current weakness in the markets and underlying commodities - the other likely outcome is a liquidation of the Canadian assets and the transformation of the Hunton/Mississippian in a trust, the Mississippian offers a 10 years drilling inventory at 9 wells per year, while the Hunton will provide cash flow as it slowly depletes during the low NG/NGL environment, drilling for the Hunton will likely resume in 2013/2014.
The first scenario offers an immediate payout, the other scenario will lead to a slower appreciation, but over the long term could unlock more value.
I guess we will find out in 30 to 60 days at the most ...
A little more than a month into the strategic review and our market share price is approaching a new 52 week low( as well as an all time low). If we continue to drift lower as June progresses I would not characterize the downward trend as meaningless. Despite any NAV analysis, I feel the share price as we approach the end of the review will be a more accurate indicator of what we can expect. The company's efforts in soliciting offers should have reached most potential investors and by late June the share price will become more of a meaningful leading indicator for potential offers. The share price will be a harbinger for the level of interest in offering a premium to the currrent market value. I am sure there are many factors in establishing an offer ie. quality and quantity of assets on the market and hydrocarbon market prices. Let's all hope for a trend reversal in the next few weeks or I fear that most will be disappointed in the review's results. If we get an offer in the $4s then how many share holders will vote for it. Or if we get more complicated outcome such as a partial asset sale and projected stats on ROA.. how much excitement could that generate? So far none of the positive corporate announcements this year have made a significant impact on market value. Any one else believes that despite confidentialality the market will start to reveal what is to come prior to any corp. announcement? I am personally hoping for a favorable surprise. Well enough rambling for now. Hard to wait this one out.
There will be no deal in the $4s, and a partial asset sale and a trust conversion will not have a limited impact either. It is not a question of sentiment or excitement, it is a question of numbers and cash flow, and those justify still a much higher price, perhaps not $7 with current NGL/NG prices, but we are talking at least $5+.
Don't let couple of shorts and deceitful posters sway your opinion about the company and its value, those people will the laughing stock of this board in a couple of months once the review is positively concluded.
and likewise for oil prices, Brent is already back above $100. 75% of the world oil trades based on Brent, North American oil prices eventually will have to trend closer to Brent as the bottleneck at Cushing is worked out with expanded capacity to the gulf coast.