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Royale Energy Inc. Message Board

fastball.98mph 17 posts  |  Last Activity: 14 hours ago Member since: Dec 26, 2011
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  • Reply to

    The divergence continues to widen

    by gusthetrader Sep 17, 2014 10:04 AM
    fastball.98mph fastball.98mph 14 hours ago Flag

    Bought some at $73. Didn't realize how weak the differentials have become from the hubs surrounding the Marcellus. I know they move a good amount out of the region, and have the uplift, but stock seems to be getting hit largely by association. Unfortunately it's not too unlikely that it could be headed towards that next level of support.

  • Reply to

    Oct $7 calls volume insane

    by cimarron2665 Sep 11, 2014 1:47 PM
    fastball.98mph fastball.98mph Sep 13, 2014 1:54 PM Flag

    Every time this happens it gets about the same headline-" Bulls pile into XYZ". Then our first thought is that someone in the know is betting on a quick reversal. No doubt that some actually act on this by purchasing that contract or the shares. However, with the stock down 30% in recent months it could just as likely be a short leveraging his gain by shorting more while at the same time buying "cheap" protection incase it jumps to over $7.

  • fastball.98mph by fastball.98mph Aug 30, 2014 11:35 AM Flag

    As of now SAM is still net debt free. Impressive financial achievement when you consider that about 10 years ago the company had 3rd party's brewing all 1 MM barrels or so of annual volume. Today it's brewing all 3 MM, and adding more capacity for growth. That said, in an industry where companies that own stable multi-billion dollar brands are levered 1/1, Jim Koch and company have to be seriously considering a shift for 2015. As a comparison TAP and STZ are currently levered 4.4 EBITDA to total debt. If SAM were to stay conservative at a notch below, but yet pounce on today's historic low cost on corporate debt, and borrow 3.2X EBITDA the result would be $500mil in low cost debt capital. The proceeds could be used to pay a cash dividend of $38/share, but much more likely Koch, who's diversifying, would opt for a buyback to ensure a strong "currency". At today's price that buyback would be over 17% of outstanding, and about 25% of the float. Shifting debt to capital would also have a residual affects such as a higher ROE, and a lower effective tax rate.

  • Reply to

    "significant liquidity events"

    by billjohns784 Aug 8, 2014 2:47 PM
    fastball.98mph fastball.98mph Aug 9, 2014 11:49 AM Flag

    From listening to the replay it sounds like nothing will change. If they sell reserves in the Bakken for $100mil, of which $40-$50mil is dedicated to the revolver ( all but $7mil being maxed) the net liquidity is $60-$50mil. However, in the same breath GE said he has another $50mil or so in leases that he'd like to purchase near term.

    On the call just about every analyst in one way or another had a question about the liquidity. Will this change the risk profile and cause downgrades? I'm not sure GE did well in addressing the questions. Hopefully the assets come in at his higher range of $150mil...

  • Reply to

    Liquidity

    by fastball.98mph Aug 8, 2014 9:09 AM
    fastball.98mph fastball.98mph Aug 8, 2014 9:53 AM Flag

    They would have to buy existing notes over par ~$108 so it basically offsets. However, I wouldn't mind simply issuing another note in the $200mil range. In the meantime they have an existing ATM on one of the preferreds and the can sell some common. GE needs to halt leasehold acquisitions until production catches up...IMO

  • fastball.98mph by fastball.98mph Aug 8, 2014 9:09 AM Flag

    CapEx $184mil this Qt. GE blazed right through the Relational cash. With the stock down something like 25% in a month, not a particular good time to show another cash crunch.

  • fastball.98mph fastball.98mph Aug 4, 2014 7:36 AM Flag

    MHR is roughly 1/9 of the market value of RRC, but MHR has 1/3 of the debt that RRC has, which was my point as to why MHR could possibly make a nice piece to thwart a takeover attempt without killing the value. I've done a little DD on Range and wouldn't mind that scenario. Again a chance to reset my cost basis, lower my risk, and still be in a company that has 40-50Tcfe resource...all for a discount!

  • fastball.98mph fastball.98mph Aug 3, 2014 10:35 PM Flag

    I don't know, but the MHR stockholder can avoid the capital gains tax by rolling his equity into a high quality E&P, that arguably has the same upside at reduced risk (think leverage). The $6.75 means nothing. Its the conversion factor, or inverted discount on the acquirer's shares that matter. The fact that your post received 6 thumbs up shows how stupid this board has become...There are a few DWT's on the other side of this...Later

  • The mega caps have not had their shares decline nearly as hard as the mid-caps and smaller caps. As a result the mega-caps have a stronger currency to do some bargain shopping on Wall St. The primary targets are names like COG, RRC, AR, SWN...The executives of these players may not think now is the most opportune time to be taken out, and might want to do a deal with MHR that was similar to the non-cash WLL/KOG merger, which was viewed as a win/win on the street. If RRC were to come knocking and offered .09 for every 1 at this point i'd take it.

  • fastball.98mph by fastball.98mph Jul 26, 2014 12:07 PM Flag

    Looking back, this began, I think, with a single transaction back in 2012. Triad sold disposal tank business to GRH for total consideration of $9mil, of which only $2.2mil was cash, the rest was in GRH securities and notes. At the same time GRH received two contracts to haul and store MHR disposal water. The value of the contracts approached $10mil. If someone offers you $10mil in business and finances 78% (much of it equity) you take it almost every time. He may be able to utilize this into a big MLP...Anyone who was paying attention could have seen what was happening, and bought GRH just last year for under $1. I recall one poster (a Wall St veteran) who after he made money off the accounting bounce announced that he was selling most of MHR and going into GRH...Nice move, DM!

  • MHR is a $2bil or so enterprise while GRH is $100mil. Where would GRH be without MHR?...Seems "slippery" to me.

  • However, Royale still has 100% on over 40k/acres. Royale still has roughly 55k net acres to Rampart's cap of 37k. Also assuming big success Royale has a original $1.6mil equity option on Ramparts shares...The best way to play this is with Royale...CASE CLOSED!

  • "Could"...the entry cost was $100/acre and thanks to the JV the cost basis is 0. Let a big player lift the O&G...it's early mineral rights that make quick fortunes in this business.

  • The last one pictured a stalking Leopard. I think this one will be a hard charging Grizzly.

  • fastball.98mph by fastball.98mph Jul 5, 2014 1:35 PM Flag

    The option expired yet Royale is either at the table listening to Rampart make a pitch for better terms, or Royale is at the table negotiating a better package in order to squeeze another payment from this struggling entity? Either way Royale really ought to let it go and let Rampart pull together so it can use its resources on next years drilling and completion of that well...far more important!

  • Reply to

    Bloomberg fails to provide complete story

    by themid2001 Jun 27, 2014 10:03 AM
    fastball.98mph fastball.98mph Jun 28, 2014 10:21 AM Flag

    Right off the bat the article says Magnum's ebitda trails the debt load by 70x. And then says the industry average is 4x. The article isolated MHR amongst the Exxons, and Chevrons of the industry, rather than peers closer to its size. Also don't expect Bloomberg to mention that MHR expenses exploration cost on the income statement in one period, while most of the peers do it on the balance sheet over time. This has a dramatic affect on the income statement...If MHR drills a $10mil well that $10mil is expensed and shown on the next reporting statement. If MHR were to account that same well under the full cost method the $10mil goes into a cost pool and is expensed through DD&A over several periods. The difference could literally drop a few million onto net income and show MHR being profitable...like Halcon.

  • Reply to

    Upward movement

    by deathblosom Jun 17, 2014 3:58 PM
    fastball.98mph fastball.98mph Jun 21, 2014 11:18 AM Flag

    The mark of a superb company might be a quit message board...Something is a little off, when a company that has declining volume growth (TAP) is priced exactly at the same EV/EBITDA as a company with growth and a lot more run-way, as is the case with SAM. The recent trajection of TAP has been fueled by investment banks upgrading the stock, which therefore give's TAP's executives currency for M&A...and which gives investment banks fee's that carry very high profit margins. Clearly SAM doesn't need M&A for growth and so we don't have the same relationship with Wall St. However, for proper valuation, either TAP needs to reverse a bit or SAM should be over $300...Just my opinion...Cheers, and have a great summer!

    Sentiment: Buy

ROYL
2.98-0.03(-1.10%)Sep 19 4:00 PMEDT

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