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Constellation Energy Partners, Ltd. Şti. Message Board

  • stevegaskill stevegaskill Jun 6, 2013 5:12 PM Flag

    CEP/PSTR conversations

    While we have all anticipated some combination/discussion between the two as possible after PSTR acquired a large % of CEP shares, I myself, as a Unitholder of CEP, do not wish to become part of PSTR. White Deer essentially owns them and will dilute their shareholders significantly over the years as a result of the money they've loaned to PSTR. Hopefully Management will tread carefully in these discussions as I fully anticipate and expect they will.

    With a cleaner/smaller balance sheet and some room on the new credit facility, I am hopeful they will pursue new acquisitions that would allow for growth and a return to distributions.

    we've finally turned the corner. Lets not waste the opportunity!

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    • Another option is that they found the deal they want to do and now they need the class A approval...

      • 1 Reply to ofir_menkes
      • Perhaps. One could argue though that if you are a holder, you probably don't want CEP issuing equity at $1.86/unit. The time to have done that was at $5/unit.

        CEP has about $21 million in borrowing capacity. I would prefer to see them make a sub $20 million dollar deal, preferably buying existing gas production that is contiguous to their own production.

        I'd rather see them drill for oil as it is hard to buy cheap oil production right now, but much easier to buy gas production on the cheap.

    • I think you have it right: pstr needs to accelerate their cash flow increase because at one point or another those $55M of bank debt + $97M (liquidation value...) of whitedeer 12% pik paper would need to start being
      repaid and sitting with a 26% of cep and getting no dividends does not really help.
      If they sit, like grown ups, and look at operational synegies, they might find some interesting things.
      cep management has a significant share holding, so I doubt very much they will give away the store. these
      shares could set them up for life if they manage to reach something that would make both sides more
      efficient in their identifying targets, drilling and utilizing eachother's infrastructure. that would go a long way
      towards getting whitedeer to make money from its investment in both companies (one direct and the other
      through the first one).
      Anyway, I was hoping and am hoping logic and numbers will be properly run and will prevail.
      cep has high overhead, but has managed to pay down its debt without any meaningful dilution and I believe
      its management showed impressive ability to manage through tough times with good hedging abilities.
      That is much more than can be said for pstr (90% dilution and counting...).
      Good luck to the company and to us, its investors.

    • See answer to the question/outcome you pose here 7 or 8 topics below....this announcement is either paving some more highway for the end of 2014 or telling you of joint venture....either way spelling the end as we know it........JMO