Buy rights at .43 and you're getting CEN at a 6.8% discount to post offering, fully diluted NAV. Of the 26 MLP closed-end funds, 14 of them sell at a better value than a 6.8% discount to NAV. CEN rights are still overvalued. Way, way overvalued. Stupid people are buying the rights here.
I'm clueless as to why people are paying so much for this stock, and the rights, at this stage of the offering. If you were to currently buy and exercise rights, you'd be getting the stock at about a 5% discount to Net Asset Value. This thing has sold at a 10% discount to NAV in the past. And, you can currently buy the closed-end fund KMF also at a 10% discount to NAV. Both CEN and KMF have very similar portfolios. So, why are people being so stupid in overpaying for CEN stock, and rights?
The stock needs to be at around $16.80, rights at .31, to bring his thing in at a fair value of around 10% discount to NAV. Stop being stupid by overpaying for this piece of junk.
I just read the SA article on MVO about 30 minutes ago. It's been awhile since I modeled MVO, but I know enough about it to know that the SA article is making a legitimate case that MVO WAS grossly overvalued in the $14 - $17 range.
There is a very recent Seeking Alpha article by "The Forensic Accountant" that is responsible for today's drubbing of MVO (sister oil trust to VOC - another Michael Voss sponsored deal) ... down 25% on 15x normal daily volume as I type. What I found interesting though was that this same author wrote another piece a few weeks ago where he analyzed 15 oil trusts. He ranked VOC his #1 pick. Wish I could provide links to these articles, but in the wisdom of Yahoo, it's not permitted. Do a google search and I'm sure you'll find them.
The big seller showing 24 K shares on the ask a week ago, and pounding on it for days after, must still be leaning against the stock. The interesting thing about this is that if you check the NASDAQ website and look at ownership of WSCI, there are only 3 institutional owners that have 24 K or more shares: Raymond James @ 37 K shares, Renaissance Technologies @ 44.5 K shares and Barclays @ 108.9 K shares. One of those 3 must be exiting. When he finishes, WSCI should lift. $6 is too cheap for this stock. We should be in the low to mid 7s off these results.
Yep. I'll take .15, and another SA WSCI puff piece, on any day of the week that ends in "y".
Perplexing. Wonder who the seller was that tried so darn hard to exit this thinly traded stock over the last week? He sure had me spooked, convinced me we were in for store for a lousy quarter. Yep Jeff, surprise, surprise.
Been around this company long enough to know this ... it's 4:30 pm EST, 3:30 pm CST, at WSCI CFO's office. If earnings were OK, they'd have been released by now. If they stink, they'll wait until after 6:30 pm est to release ... after closing time at their offices, so they don't have to field any phone calls. It's a sure bet we're looking at yet another quarter of results that stink up the joint.
Discouraging. Someone wants out, badly. And the only conclusion I keep coming back to is that this person knows what's coming next week in the way of the earnings release. Once, just once, I'd like to see the SEC come in here and smack some WSCI people around for leaking insider info. Tired of seeing it happen here.
No sooner than I post positive comments about the direction of stock price and volume just ahead of earnings next week - a massive number of shares come on the ask. Daily volume almost 3x avg now and 24 K shares to sell just popped up at $6. Someone caught wind of the results to be reported next week - and the signal suggests we're in for another lousy quarter. It's like rats leaving a sinking ship.
In the weeks and days leading up to the earnings report, this small company has a habit of trading in the direction of the earnings. News out of this company always leaks. Always. Buyers get ahead of good reports. Sellers dump in front of poor reports. I've been in and out of this stock for almost a decade. This pattern never fails.
Earnings are next Tuesday. Notice how volume and price are starting to move higher? Hmmm, wonder what that means?
The energy biz is peanuts for WSCI. They live, or they die by Polaris. Motorcycles. ATVs. Snowmobiles. 3 Wheelers. The real question you need to be asking is how much biz does Polaris do in exports, and how will the recent, massive ramp in the dollar impact those exports? I don't know the answer, but I do know that's the key question to ask.
Beyond that, you should care about what the strength in the dollar does to WSCI's prospects to picking up future business, from anyone. Compared to a couple months ago, sourcing your parts from Europe, for example, is now 20% cheaper than buying them from US plants. Can that be good for WSCI? I don't think so.
Having said all that though, WSCI will be fine, provided they do right by Polaris. The Polaris domestic sales growth should provide enough opportunity for WSCI to prosper.
Pg 17 - Investments.
Pg 49 and 50 - Discussed in detail. Plans to drill 13 new wells in Texas.
This massive ramp in development costs will lead to lawsuits. The development expenses go into the pockets of entities controlled by J Michael Voss, primarily to Voss Oil. Mr. Voss is the main man behind the curtains of VOC. The problem is that this company was brought to the public markets with significant disclosure indicating a need to only spend $19 M more in development. That was in the 424B filing, repeated multiple times in following 10-Ks. However, they have spent $45 M, and now tell us, in the latest K, they want to spend $64 M more. Why is it needed? Reserves already exceed the minimum needed to pump under the trust terms by 30%. Unless they plan to pump more than the minimum, which they have not indicated anywhere, then this run-away development plan appears to be an unjustified ploy to line the pockets of Mr. Voss.
They need to put a complete halt to development expenditures, or justify further expenditures by indicating a commitment to pump and sell beyond the minimum.
CUE THE LAWYERS.
Cum to date = 3144
Remaining to 10,600 Min = 7456
Current reserves = 9665
Reserves vs Remaining to Min = 1.296
The net profits interest will terminate on the later to occur of (1) December 31, 2030, or (2) the time from and after January 1, 2011 when 10.6 MMBoe have been produced from the underlying properties and sold (which amount is the equivalent of 8.5 MMBoe in respect of the trust's right to receive 80% of the net proceeds from the underlying properties pursuant to the net profits interest), and the trust will soon thereafter wind up its affairs and terminate.
So, I ask ... again ... why the need to spend an additional $64.5 M in development costs ??? ... unless the plan is to pump and sell more than 10,600 before YE 2030? Ok, if that's the plan, then give us enough information so that we can place a fair value on VOC stock. Otherwise, the $64.5 M is nothing more than an effort of related parties to raid the cookie jar and steal VOC shareholders' cookies.
CUE the LAWYERS.
The numbers are fine, its your interpretation of the numbers that lie.
Thus far, the increase in reserves justifies the development costs. They paid about $9 a barrel in development costs for each barrel added to reserves in 2014. Over the life of the trust, 2011 - 2014, they have paid about $22 in development costs for each barrel added to reserves. That seems more than reasonable.
In 2014, their operating costs were $20.5 M ($15.3 Lease operating + $5.2 taxes). Divide operating costs by 744 K oil barrels, and you get $27.55 a barrel. (This calc ignores the gas).
You are correct though about this, VOC must put a halt to development costs to stay cash flow positive, have any hopes of paying a dividend in future quarters, if oil prices stay where they currently are. Your analyses, however, is a stupid as you are. If they cut development costs, then they can stay cash flow positive down to about $28 - $30 a barrel for oil, based on the math above.
You are correct again in questioning what the *$% VOC is doing with their development efforts. They already have reserves that exceed the 10,600 MMBoe minimum required to be pumped and sold under the terms of the trust. Reserves exceed the minimum by 30% ! And, they have disclosed numerous times in the past that they only needed to spend about $19 M more in development. However, they have tapped the trust for $45 M thus far. And now they are telling us they want to tap it for $64 M more! All that money goes into the pockets of related party companies. These guys are sitting themselves up to be sued.
The reserves are sufficient. If they want to tap the Trust for further development, then they need to pump more than 10,600 over the life of the trust. More importantly, with disclosure of massive ramps in development, they need to disclose how much more they aim to achieve above and beyond the 10,600 minimum. OR, the LAWYERS WILL BE ON THEIR DOORSTEP.