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.
Soros fund sold 5.3 mil shares of MHR in Q2 reducing its holding to just 1.4 mil. Owning 1.4 out of 200 mil is not what I would call an activist position.
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...
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
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.
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!
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.
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!
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.
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!
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.
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!
The executives are boosting their holdings. Selling 50k in the open market to fund an exercise of 200k.
String, Other than from hearing on this board that Rampart's stock hasn't been moving, I have not followed Rampart of late. It could be that Rampart may opt not to exercise the central block. If that's the case Royale retains over 60k net, and still has a negative cost basis on the acreage position. The option values the central block at $100/acre. I would prefer that Rampart passes on it. If this acreage were to get half or a third(~$10K/acre) of the values that the some of the lower 48 plays have gotten in recent years, would put a value of $600mil or $40/per share. Laughable as it may seem this IMO is not too far from a possibility.
Rampart can purchase 75% WI on the 17,000/acre central block for $1.7mil. If they do this will bring in a total of $5.1mil from the JV. The central block option along with Rampart drilling and completing two wells by April of next year would effectively give Royale an average acreage cost of MINUS $45/acre on the remaining 52,500 net acres. If the play does nothing going forward, Royale still will have done very well. If however, the play gets hot you can't beat a $50 million market cap that holds 52,500/acres at a cost of MINUS $45 per acre.