harehau - matched against a peer rating it is right in line and MPO is significantly undervlaued based upon the same review
Take Laredo (LPI) for example, a company with 1.35 billion in debt with a little more than 600m in revenue and their market cap is 2.65 billion. Laredo just sold their "gas heavy" property in the Anadarko Basin for 438m to be able to go and drill a concentrate in the Permian Basin.
My point is that we believe Crum/MPO is in a better position in the Anadarko/Lime concentrate, compared to drilling in the Permian. MPO has a market cap of 375m? That is an inefficiency, especially when one realizes that we did not limit our comparison to Laredo. You can pick a handful of other small cap companies with the same amount of debt with a market cap that is much higher.
Where it gets interesting, is that at 375m MPO market cap the market is discounting the Upper Gulf to worthless. We have found data suggesting that other companies are drilling Wilcox and getting decent results. Upper Gulf can strike real handsome returns once Crum/Herbertson and Co. get their hands around the data and can zero in on it. I would much rather be poking around in Upper Gulf than in the Permian...
Inwestbanker, with $100+ oil, the debt leverage should be working in MPO's favor, yet the stock keeps falling. This weakness has to be signaling that something else is not quite right here. Maybe its a corporate issue - trying to consolidate several acquisitions in a short period of time. Lots of new people, lots of new properties, lots of "wheel spinning". I cant imagine that they are drilling one dry hole after another, so what else could it be? I disagree that the market is inefficient. Too many shares are traded daily in MPO stock for that kind of mis-pricing to occur.
The acquisitions and new debt has not helped even if they added value, which it appears they did, time will tell. They can't afford to do another deal. It seems they are a better value than when they did the IPO and the stock price was in the mid teens.
The market is inefficient all of the time, MPO is either mispriced or all of these other companies are way overpriced. Time will tell but if MPO can pump out 30k by the end of the year it won't be trading at this market cap and if it is I would back up the truck.