As always, market is irrational. XTEX and XTXI just secured the bulk of the financing that will secure growth for the next 3 or 4 years, financing that they have already mentioned, and I might add, private placements, that should not effect the daily volume/demand and it plummets. Do these people understand the fundamentals of the company? Has anything material changed since yesterday that warrants a $3.00 drop? The 2.5 million shares offered by XTXI are about .5 million more than expected, but come on, they bought into the largest and one of the fastest growing gas fields in the country and they raised enough capital to handle much of the expansion capex in this deal.
> Do these people understand the fundamentals of the company?
No, they don't. But we knew that, didn't we? Do you remember KPP and KSL selling at the same yield? Totally irrational.
The current question is how low XTXI will go. At least we cleared up the terms for the subords. The only thing remaining is when they will have the next distribution. We should be finding that out in the next 2-3 weeks as well.
I still hold out hope that it will drop below $75 when that news breaks out. I am long but I want to buy more. Lower prices don't faze me. I have some interest in seeing how low it will go, not least because I predicted $66-$74 right on this board. But my major interest is predicting how high it will be in a couple of years. $135-$160 is my estimate. There, I said it.
One note: I was not happy with the management's decision to issue (4.5M) more XTEX units at a much heavier discount than warranted. They also did not use the $13M of XTXI's cash or any of its borrowing ability and they sold XTXI at the low end of my estimate.
XTXI is issuing stock at $72 (on average). That is not too far from where the shares were trading just before the announcement, so it looks pretty fair.
Beerman - issuing XTEX units that will not pay distributions for 18 months makes perfect sense, and if you do that you have to issue them at a price that accounts for the lack of distributions, and the lack of liquidity. The price of the XTEX units looks perfectly fair to me also.
IMO, the pps movements of the past five trading days have nothing to do with fundamentals. Herd psychology, program and momentum trading, macro-nervousness, aand possibly market manipulation (if you believe in such) has had a lot more to do with the price of XTEX/XTXI and the rest of the market than company business fundamentals. At least that's MHO.
The overall trends on global and national energy matters are still intact. Stay the course.