Thank you for the personal note. You are sweet. Leap of faith to assume the rigs will be extended at the current rate. Best of luck.
One company has a future and the other doesn't. NE took it's relics and dumped them into PGN. If the transfer agent didn't send the shares on day 1, you lost 6% of PGN value. By day 2, it was more. Will PGN come back? I don't think it will any time soon because it isn't supposed to. 2 ways for growth: drill rates go up or PGN buys newer drillships. Well, one isn't happening and 2 would be in direct competition with NE. I continue to say the spin off was a mistake. They would have been better off scrapping old rigs as they aged and using the dividend for paying down debt. What's done is done. You can defend it all you want. I disagree with it. Now I'm a dividend investor. Both of us are watching blinking red day in and day out. The directors should take a pay cut as long as it takes for rates to recover.
We shall see how this all plays out over the next few years. A little too dramatic for me though. Best of luck.
We get a $.37 dividend and then we lose $.70 in share price. Doesn't seem like a fair trade. I sold my Paragon. That company seems like it has a hard way to go. There has got to be a way to reposition or retask the old drillships.
California is in a water shortage. Maybe they can turn the coldstacked ships into desalination plants and pipe the fresh water back to the coast, or they can bottle the freshwater and sell that. Aquafina is more expensive than oil on a per barrel basis.
Your statements make sense; hopefully you are wrong in your prediction. The fleet status reports are helpful in that the contracts are fairly transparent about ending dates, rates, and extensions. The unexpected downtime has finally slowed and the new drillships coming on line should bring more money to the bottom line. Perhaps they will use that to scrap the ships that are beyond their expected life. No sense paying storage costs and taxes for something with little or no value. Dare to dream.
So we are getting 1 of Paragon for 3 of NE. Let's say I didn't want any shares of Paragon and I owned 12 shares of NE. Instead of 12 shares of NE and 3 shares of Paragon, I would want 15 shares of NE. I don't want to have to sell my Paragon on the open market and buy NE on the open market. Is NE paying my commission for buying and selling between companies?
What management should offer is an opportunity to take all shares of NE and forgo any shares of the spinoff before it hits the open market.
I will love it when (and if) Paragon compensates NE. I only wish I was the banker taking my % for that transaction.
So be the analyst and tell me the future of Paragon. Is it a collection of older rigs that are going to require lots of maintenance and earn progressively less? Is Paragon going to grow? If so, how? If not, why not just sell the old rigs and if you can't sell them, why not scrap them? The finance costs of this spin-off have to be huge. Also, you need two HR depts, 2 regulatory dpts, and 2 managements. The only thing I see is if some fresh money comes in and wants to pay a multiple for something most see as a liability. Why would they do that?
They should have saved the money and kept it one company, held the dividend and paid down debt. Pis and his friends would have made more than 5% in stock valuation. So would I.
That is what makes this company so frustrating because they keep screwing up something that seems so basic. Really amazing how they keep tripping over their own two feet.
Please explain why Paragon needs a billion dollar loan? If the company is making so much money and they can afford these "great" dividends, why do they need to borrow more money? Paragon is going to have a company with standard rigs that aren't getting any younger. Now they want more borrowing? Are they going to go out and build new drillships? If that was the case, why even spin off the company? This is just not making sense. It is wrong until proven otherwise.