PVA management should be ashamed of itself. With $100 million they can buy back half of the company and they refused to do it, saying it "won't solve the problem." Oh really? It'll solve my problem: it would double the value of my stock.
PVA is out of its league. Management is incompetent. They drill laterals the wrong way in Pennsylvania, they drill dry holes in Oklahoma without taking seismic first, and they let the stock trade down to its cash flow without buying it back. They are a disgrace. I wish to God I had control of this company. The first thing I'd do is march Baird into my office and hand him a pink slip. Don't let the door hit you on the way out! Then I'd announce an $100 million stock buyback effectively immediately. Then I'd sell the natural gas for whatever I could get along with the Granite Wash. The total should come close to paying off the debt. Then I'd drill every well location in the EFS over the next 2-3 years. Finally, I'd convert to an oil trust and pay the money out to shareholders.
Now, if I can figure that out, why can't they!
Maybe an outside company will see it the way you do -- and since the insiders don't own much of the stock, any good CEO of one of dozens of energy companies has an open door to make a move on PVA.
If your plan is a slam dunk -- and I'm not saying it's not -- where are the dozens of companies that can pounce on PVA for chump change?
"With $100 million they can buy back half of the company and they refused to do it"
First, that's $100M they don't have. They can't draw that amount from the revolving credit line either as there is covenant against using borrowed money for stock buyback or divvy.
Second, PVA is projected to lose $0.70/share in 2012, it simply can't generate $100 million spare change out of thin air.
Third, with half of shares gone, PVA's loss in 2012 would be doubled to -1.40/share, hardly any quick help for the long-suffering longs.
Fourth, stock buybacks are only instituted by profitable companies or cash-rich companies, PVA is neither, in fact, it's teetering on the verge of going under. I can't believe a self-professed long would come up with this bone-headed idea.
It would double our loss? What loss? We're making money now, and a lot of it. You may be right about the covenants, but how about paying for it out of cash flow? Lay down a couple of rigs. We're cash flowing probably $300 million for the year. Take off a quarter and just buy back the stock. And hey, here's an idea: sell the Granite Wash! It's probably worth the market cap. EFS production is probably 2 million barrels annualized now. Buy back half of the company with GW and use the rest to buy back debt.
Where there's a will, there's a way. Management's approach isn't working, obviously. Time for some fresh thinking.
Post all the negative you want, still yielding close to 5% dividends. It's an exploration and production company and those really don't pay huge dividends.
Compare their cost of debt to any other industry, if PVA was in bad financial position...they would not be able to finance debt.
Stock buy backs...you can't do it with borrowed funds.
Cash uses...who really cares what the sheeple panic about? The company is growing. Have you even compared previous quarters or years on cash flow? It is better investment to do what they are doing.
Probably a large percentage of sheeple think PVA is primarily a gas producers (which they have gas assets), but the liquids are also a great portion and growing.
If there was a "bad" financial position, then they would NOT be allowed to pay a dividend. So with your post, I can only imagine you are only playing a short position hoping someone would sell to increase your gain. Now the price has dropped, the dividend yield will support it quite a bit and probably won't get much cheaper.
As far as insiders picking up a lot, as with any company there are limited windows that would allow them to buy especially when PVA has a lot going on with new drilliing and acquisitions, they just can't buy at ANY time due to insiders limitations (unlike Congress that wrote special provisions they can trade on insider information and not get prosecuted).
There certainly isn't ANYTHING in the USA from starting your own company and doing your exact suggestions! :)
Selling off some gas assets now when they are at a low isn't wise. If you truely are long in the position, no one likes seeing it low, but if you are long it is a great buy. That is where opportunity is created.
IR got back to me: they can't buy back stock with cash flow or borrowed funds. Covenants won't allow it.
I still say sell what you have and knock out the debt, then convert to an MLP or oil trust after drilling the wells. You can also hold onto the gas assets until a better time to sell and then convert. Either way, the stock is trading for its cash flow anyway, so you might as well convert and get a decent multiple.
I am long this stock and have never been short.
I already mentioned this many times that this company ( I don't even thinks it is a company anymore) is trash. Market is at all time high and this garbage is at all time low. Go figure this one out. Don't waste your time discussing where thy are drilling or what ever the hell they are doing. The bottom line is this stock is hurting real bad.