Stock closed at 12-31 at 7.31 and closed today at 8.26 for a 13% gain. Not bad.
Earnings for last quarter and probably this quarter not great as there have been a number of operational delays. These look to be solved (weather related) and good weather coming so we shouldn't have any further big delays. Lots of production coming on line in the next quarter and a good bump in reserves with our midyear report. A small private placement was done for some immediate cash, but nothing terrible as far as dilution. Oil prices holding up and NG well above where most anyone expected to see last fall. Looks like we will stay above $4.00 for a good while and that is plenty high enough to make some good money. Besides production here is what we will (hopefully) see in the next quarter.
Asset sales--the bigger the better.
Registration and calling of the warrants bringing in a huge amount of cash
Hopefully no more private placements or secondary stock offerings
Redemption of the Preferred C shares
Continued stock price appreciation if wells outperform as they have in the past.
Given the yield on the Preferred C Shares, would it be better to pay them off or announce an expansion of the Eureka Hunter Pipeline to help increase production to feed the Northeast where they are quickly heading to a NG shortage? Contract the pipe companies now before contract times lengthen out too far so that the value to a MLP or buyout would be greatest - in my opinion the yield on those bonds would be nothing compared to the shareholder value that would be generated by rapidly expanding the pipeline!
It strikes me that that cost of building a pipeline is really hurting MHR. They don't get credit in the pps for this as they are trading as an E&P and it really hurts their cash flow. MHR can do fill in pipework to attach their wells, but building something to go east is well beyond their means. Keep in mind that they have right now about 100 miles of pipe--not a lot in the scheme of things and it has taken them a long time and a lot of money to get to that 100 miles. I am glad they have done this so they would not have completed wells sitting idle, but their primary business is getting energy out of the ground. Redeeming the C shares will help earnings and firm up the balance sheet.