It's not diluted in that sense because Sabine contributed all their assets and credit profile etc in the merger. Their assets were worth 3 x more then Forest and lower leverage so those holders of Sabine should end up with a bigger piece of the combined equity.....So the question is how much is each share worth of this new entity with the new combined asset base and debt?
I guess we won't know until they file the combined financials within 71 days of closing of merger. It will be enlightening to know the hedging due to the drop in oil.
The combined unity has approx. 440 milion shares out 110 forest and 330 million sabine holders forest having about a 25% ownership in the new combined company. What is each share worth? Asset value?
I watched the NY close it closed at 1.39....That's screwed up that it's marked after hours to the 4pm close....legally it should be closed at 1.39. that was the price of the closing bell trades
My target which is based on a 70$ oil in 2015 and $78-82$ oil in 2016 is between 4-6$ a share. so a 300-400% appreciation.
Inclusion: The company is well positioned to ride this out and actually take advantage of depressed land prices, they could add to their portfolio at a very low cost and lock in some lower service cost and transportation agreements as well.
250 million in revolver, hedges, lower cap ex. a concern but not a huge one unless oil stays below $50 for 2 years in that case 90% of oil in North America will be BK, USA will go into a depression.....don't see that happening. See other post on global demand and depletion and cost curve of each incremental barrel up to 93 million a day. The greater threat is to deep water drilling and production.
• Debt conversion and average cost
After converting 21million in debt into approx. 16 million shares they will hold about 30 million share after transaction with a total investment of $73 million or an average share cost of $2.44 so any buyout would have to be above this for it to make sense for them to sell.
Food for thought.
If next year they produce 4400bopd and oil is $65 for all of 2015 the average realized price per barrel with hedges will be $75 and if they realize profit above $60 a barrel they will generate 20.1 million in profit or .25 cent a share based on 80 million shares out. Pretty solid outlook in a worst case oil price of $55 a barrel for 2015 plus they will hbp additional acreage and add reserves to use for borrowing base, no debt maturing until 2019 and now after conversion long term debt is only approx. 160 million. By 2016 oil should be bouncing back. Only the usa has been able to grow production and now the shale rigs are being laid down, Shale oil well produce much of their production in 2 years, steep declines and Russia won't be drilling and therefore this so-called glut of 1 million barrels a day will turn into a deficit...not to mention global depletion runs about 7 million barrels a day annually which means 7 million barrels a day must be brought to production to stay flat at the 93 million a day in demand which will be 96 million a day in demand in 2016..... You be the judge.
We have the liquidity, solvency, and asset base to more then survive and grow when the turn comes.
The Bakken works between $50-70 per barrel, we come in around high 50's low 60's for mid cycle cost and that is well below most basin.
Please comment intelligently with some facts or you will be blocked. It's okay to disagree but back it up please. Less
Sentiment: Strong Buy
Oil at 47$ BBEP at 5.39$ My call is they will touch that before rising to $75 in 2015 oil and BBEP cutting distribution to .10 a month and ending 2015 at 11$
They are covering their backs from law suits if they cut distribution. Stating clearly the language "at least" is based on these assumptions, so if 1 or all do not happen they are not liable.
But in bk they will restructure, cancel common like LPR or Gmxr to name a few...companies are rarely broken apart and sold in peices, the bond and banks push for restructure where they get the equity, the executive keep their jobs and the stock is cancelled
Good for you. Wow 3 k that's a lot of money...lol... to ignore the facts is silly much like trying to create some personal relationship to an insider, as if that give you credibility, were your previous girlfriends from END, GMXR, ATP, Enron... You are right its risk reward...but cheap can get a lot cheaper, and until oil bottoms you are just guessing and hoping... what a punk.
There are say merits to what you say, my comments were more to point out the ignorance of Smither1970. plus there is the b factor in the TMS to cope with...which means more capital to keep production flat...I think a sale will take time the major and VC that have capital will be selective knowing that a lot of land is coming up for sale as the leveraged E&P's look to remain solvent. Perhaps a sale of all NG properties would be better.
You could say more, that's only half it's oil production is hedged, the other half is unprofitable at sub $60 a barrel and therefore if oil stays low, any new production it cashlfow negative. Debt still needs to be serviced and each new well cost 11million to drill....selling the Eagleford will help but who will buy? Especially when the Eagleford is getting close to uneconomic at this oil price....what price do you think a buyer will pay at the bottom of the cycle.....not a lot.. Plus selling Eaglefoord means lossing 2200 barrels a day of production and cashflow.... Need you say more? Where to begin....
I wouldn't worry they are incredibly well hedged and have a lot of liquidity. By q2 2015 NA oil production will flatten and begin decline as will some other national oil companies abroad. This company will thrive and I coould see them going on an asset buying spree in 2015. The presentation says it all, hedges stable low decline, not alot of capital to keep production flat.
Sentiment: Strong Buy
And there is the debt covenants which we will be in violation of by the end of q2 15
the hedges cover only 55% of oil production, it's not enough to ensure solvency, that's the reality and why the debt is trading at .57cents. It's hard to say what will happen. The credit line has a re determination is a few months which if cut could seriously harm the companies ability to generate cashflow....the oil price ang ng price will dictate all....its a waiting game I think we will stay flat or marginally down with tas loss selling until oil climbs back to 70$
With 80% of reserves developed it doesn't take much to keep production flat, they can suspend all growth projects, lower cap ex spending drastically until oil recovers, hedges will cover us for 2 years and no major debt due until 2020, bonds are trading at .91-.92 cents on the dollar, no alarm there, of coarse should oil stay below $80 for beyond 2017 then we might have a no problem but we can choose to focus on Natural Gas which we have a lot of reserve of to develop at a low cost..... it's going to be a rocky ride but you make money when you buy and at 10$ a share and the hedges and lots of liquidity I see the risk reward favors the upside 12 months out.
with over 2 billion in liquidity, they are extremely well positioned to pick up assets that are extremely cheap that can be accretive at these NG prices and oil, hedge them out and when the market price stabilizes for oil price freecash flow will grow rapidly. They can acquire to maintain distribution level. Many shale companies will have to sell off legacy mature properties to maintain leasehold in their growth plays.
liquidity and solvency are paragon here.
Sentiment: Strong Buy