Those concerned about sale think about why Enervest would have made this acquisition in Dec 2012
By NOAH BRENNER Cleveland Ohio
13 December 2012 23:59 GMT
US INDEPENDENT Enervest has bought Chesapeake Energy’s non-core acreage in the Utica shale in Trumbull County, Ohio, and is adding the land into its own package of assets for sale in the tight liquids play.
I don't think that anyone here doubts that acquisition a year ago was done with the best of intentions. I think those here complaining about management and now having doubts about the deal are feeling that management overplayed their hand and lost sight of "conditions on the ground". They then are rubbing salt in our wounds by not communicating with shareholders about anything for over 2 months. EVEP's stock price is being punished, but management isn't feeling our pain. They are noticeably disconnected to the financial pain being caused by their actions. If the stock price were to go up 25% from here, it woud be nowhere near it's 52 week high. This while most of the market and most MLP's are setting 52 week highs. Hard to watch a stock with such internal value be so badly mis managed. There is a clear and decisive trend of selling here. It's not shorting. It's not daytrading. It's a continuous exodus of both long term and sort term EVEP investors. People are voting with their feet.
monster I can speculate with you on the silence is when I participated in significant deals there was a quasi silent period in the deal agreements, so news did not leak on either side until the deal was wrapped up in financing, tax exchanges, etc, etc so not surprising if you have heard nothing in this time frame. Also based on the other posting I made on Enervest possibly drilling some vertical test wells to the far north into the rose formation tells me there was negotiations going on on the "upside" potential in the other zones (bids on known zones may have come in lower than expected or they were just trying to prove up more value) is part of what pushed the deal to post Dec. Again all just my speculation fwiw
Monster, let's try to separate the hyperbole from your comments, some of which are accurate. You may be correct that management misjudged the selling price of their acreage, but that assumes there is no sale transaction and instead some type of jv. The market is reading the postponement announcement that way. I don't understand what you would expect them to say at this point if the transaction has indeed morphed from a sale to a jv transaction, especially if nothing has been signed. If they came out and said the buyers walked away after only bidding $10k and now we are working on a jv transaction, but don't have any definitive agreements and may not get them, the market would presume that there would be no deal (no jv) and the stock would plummet. I guess you would prefer a large decline to a slow bleed, maybe so you would have more confidence buying the overreaction knowing you were not overpaying. Second, hyperboles is your assertion that they are not suffering from the decline in the stock. They probably have more invested in it than anyone. While it is true that most companies' management get incentive and other awards of stock, that does not mean that they don't suffer a loss just because their cost basis is zero. Third, reference to other MLPs is not accurate. Look at the other e&p MLPs not the whole sector. The pipeliines and refineries have been soaring, but others have not. Of course, EVEP soared last year, so the other MLPs are catching up and EVEP is coming back because of the disappointment. Finally, unless you work on a trading desk, how do you know the selling is long-term holders. You claim mismanaged, but there are lots of cases in which management misjudged the value of their stock (remember when Yahoo turned down MSFT's buyout offer). Maybe the Utica is not worth 15k per acre. But is this really mismanagement if the reason is because the buyers didn't show up at 15k but instead only bid 10k per acre. The property is worth what the market will pay for it. Management may have misjudged it, but failing to communicate the blow-by-blow negotiations is not mismanagement.