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Equal Energy Ltd. Message Board

  • beauforttiger beauforttiger Aug 12, 2011 2:34 PM Flag

    2nd qtr results appear very good

    2nd qtr results appear to be very good, particularly after several difficult yrs.

    I am not sure why the stock price is not $7 to $10 due to book value, income, and demonstrated results from management.

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    • The future still hasn't produced for the shareholders. Looks like management got some giga rewards recently. For what ?

      Klapco and Klan won't ever change their spots. Even if this stock went back below $1 I still wouldn't buy in as this management is as trustworthy as an alcoholic with your liquor cabinet.

      Does anyone else think it's too ironic that the CEO (Klapco) is awfully close to Klepto. Stealing from the shareholders.

    • lkj2096 Oct 2, 2011 7:46 PM Flag

      Yes, I agree we've spilled enough ink over the commodity contracts. However each of us feel over the treatment, they are not material. Equal hedges about half of its bbl/day output, at prices that are now favorable, unfortunately. (I'd rather have seen a loss in unrealized commodity contracts in June, because that would have meant oil prices were very high. As long as they pump more than they hedge, that would have been a good thing.)
      As for the debt/equity issues you brought up, my statement regarding repaying bank debt pertained to pre-Petroflow settlement days. (That acquisition was not for free, you realize, and had to be financed somehow.) You feel management overvalues its assets; we'll see in the coming quarters if they overpaid or not. I think that jury is still out. Also, please note that 80 million in 8% debentures were retired this year, and partially replaced with 6.75% debentures. Lowering cost of debt = good thing, yes?
      Ultimately, the proof of the pudding is in the price per share. At the current time, this makes you right on the only count that matters, doesn't it? But lets see what the future holds, my friend.

    • There are two accounting sides to the futures contracts. The income they produce, either through exercise or trading (realized). That income belongs on the income statement. The other side is the value of the contract (unrealized). That belongs on the balance sheet. Anything else is ENRON style accounting, regardless of 'timing'.

      Again, if you think that accounting method is acceptable, you are invested in the right spot. You will never convince me of such so we shall leave it at that.

      To the point of the balance sheet. Are you reading the reports or the press releases ?

      Bank Debt: Nearly double YoY. Was $66M now $122M. Not sure how you figure that is paying down ? They recently raised the ceiling on that LOC to $200M so expect it to grown some more.

      Shares: Increased 63% YoY. Was 22M now 36M (diluted).

      If the Debt was decreasing while Shares were increasing it would be one thing, but both escalating is not good at all.

      There are two reasons nobody is rushing in to scoop this up.

      1. The financial condition of this company is nearly as bad as it was under ENT. Granted, improvement with the bank standing at the expense of the shareholders. The numbers are just rearranged to protect the innocent (yeah like there are any). The only one getting anything out of the organization is the upper management, surely not the stockholders.

      2. The asset values are not nearly what they would like to think. This group has always overstated their value and this has been PROVEN with the assets they have sold. O&G sector provides substantial latitude in valuing assets as it is commodity based. Some companies stay on the conservative edge, EQU has always rode the aggressive edge. Benchmark this Klan to other Canadian producers such as ERF.

      The street is staying away from this for fundamental financial reasons, not because of a popularity contest. You might be waiting a long time for anyone to buy this up. Unless of course EQU has another fire sale, always someone in line for that.

      I wish you luck here, don't like to see anyone lose money. There are just so many O&G plays out there far superior to this one. Don't think just because this is 4& change that it's cheap. Would you pay 150 pennies for a dollar bill ?

    • never entered my mind that you were trying to mislead on the good points you made. I suspected you may had forgotten to consider the extra production. I would be interested to see your projection with the added production included. tia

    • I have exactly the same feeling. Are we missing something. It sure looks like a buy to me and getting better all the time.

      • 2 Replies to rsue11111
      • What you're missing is the smoke and mirrors with the numbers. Klapco & Klan have more 'Non GAAP' measures than a pinkie. This is nothing but a churn to pay high end executive salaries. No shareholder equity is really being built here.

        Let's take a look at those Q2 results. Seems like they finally made a profit ? Yeah, the way they measure it. Take a look at page 28 of the Q2 report. They have an Unrealized Gain on commodity contracts in the Income Statetment. WTF is dat ? Just so happens to be that amount is nearly the same as the claimed net income.

        How to you claim income on something that isn't sold. That right, Non-GAAP, they can state what they want.

        I look at EQU (ENT) a couple times a year for grins and the first thing I noticed in their press release Q2 2010 had a stated profit for comparison. I know the last time I looked at this it was still posting losses so I dug up the old report. Sure enough, went from 19c loss to a 12c profit, amazing how that happens when you have a new way to count the pennies.

        Look for yourself - Page 5 of both reports. Compare Q2 2010 from both reports. Oops !

      • I also see this as a very undervalued stock. One major issue is that EQU is a small cap that has been out of favor for years. With the name chage,better balance sheet,& increase in production it should start getting some attention .