Frankly, I am hoping for a sale of the company at this point. We may be late to the game trying to tie up smaller bolt on acquisitions, and we will know by the next earnings report. If the company is silent on the issue, the market will assume the worst. Klapco has boxed himself into a corner: grow or wither. If you are valuing us based upon the dividend, check your math. The stock price will shrink, not grow to provide the market yield.
Noticed we are now paying our CFO $230,000 per year. If we are not expanding or involved in a potential sale, this is a blatant blunder. Ouch!
We are carrying too much overhead for a small company.
Our best bet might be to sell out to a Kinder Morgan type. We would be a bolt on acquisition to them.
Probably worth a 30 ~ 40% premium to today's price.
I also have to agree on what price to be sold at as well as the comment about the second rig wouldn't do much at all. Now that EQU is in these Russell Index's I still say this is nothing more than a value play. Funds will buy this company for the dividend and add to their basket of dividend stocks. The dividend appears to be stable for years to come. I still have a problem with a five year drilling inventory. If they don't pursue some bolt on properties they may as well just go ahead and let it go to a growth company. This is the $1000.00 question of what it is really worth. I feel most people including myself would just take a 25-30% gain from this point and bail.
One game changer I forgot to put on my post last week was the increase in dividend (if it happens). The 7Million dollar savings from moving and shedding those jobs is about another .05C to the earnings that could be added to the payout. I wouldn't expect all of that at once, but if they continued to increase this dividend it may gain a little more traction.
The daily price action seems to have an elemet of an overhang of sellers willing to exit at the current level. I went back and looked at my own holdings which I have reduced by about 10% to clear out the higher priced shares and increase my margin of safety. I noted that across all three accounts
that I have a current potential 25% gain. Now when you think back about the number of times over the last year that the company has disappointed the shareholder population and the collapse of the
interest on the Private board it is not hard to see why there is a pervasive selling over hang every time the shares rally slightly. The company has done absolutely nothing to change the perception that it is a self serving institution with no interest in fixing the intrinsic undervaluation of the assets.
The more hopeful side of the price action is that there seems also to be some underlying demand which grinds the price back when each selling wave strikes.The Montclair Standstill expires in a couple of weeks and that event may change the dynamics.
I'm not sure a second rig and the associated costs would add much to the bottom line with the stubbornly low Conway propane prices coupled with what appears to be an inability to significantly lower produciton cost with the current Equal model. The only answer that makes sense to me is to merge into a larger entity that can
result in lowering the unit cost side of the ledger. The new slimmed down Equal model to me is very similar to
wasting production asset trusts without the much higher dividend or tax advantages.