Who would have thought the whole company would be worth one quarter of the value of the apartments they had and sold. Or about the same as the corporate jet. they unloaded.
Market cap 4.27 million. That is less than half the cost of one eagleford well. The company is priced at virtually nothing at this point. Really does not speak well for any chance of survival. But it is worth multiples from here if Moly mine resolved and company does survive to higher energy prices.
It won't lower share count or reduce the cost to pay current dividend. The general partner will just hold more of the shares and collect more of the dividend dollars. Too bad CEQP isn't sitting on cash so they could buy in shares at this price and retire them.
USEG does not have enough money to get rid of the Moly headache. An annuity to cover the cost of water treatment in perpetuity would cost a fortune. There is no one who will take on that obligation. TC did temporarily take it on, but walked away from tens of millions of invested dollars to shed that obligation. In retrospect the day TC walked was the right day to bail on USEG.
There probably was a day when USEG could have traded the Moly Mine to City of Crested Butte and State of Colorado for nothing. But now the City sees the horrible position USEG is in and seemingly would rather kill the company than compromise. Wonder where the obligation to run a water treatment plant would line up with other obligations if USEG was forced into BK.
eystone rejection expected to spur more crude-by-rail shipping into the U.S
From Dan Healing, Calgary Herald
Keystone rejection expected to spur more crude-by-rail shipping into the U.S
Rejection of the Keystone XL pipeline will complicate and add cost to getting western Canadian oil to U.S. markets but it isn't expected to actually prevent any shipments reaching south of the border, observers say.
The decision announced Friday by U.S. President Barack Obama was greeted with disappointment by Calgary oil producers, industry insiders and local businesspeople who observed that Canadian crude is being singled out by the United States with a trade impediment while other countries have free rein.
Suncor Energy Inc. president and chief executive Steve Williams said in a statement that the U.S. decision, made seven years after Calgary-based pipeline firm TransCanada Corp.'s initial application, hurts Americans as much as it does Canadians.
"Clearly we're disappointed in today's decision. Keystone XL is important infrastructure not only for producers in the U.S. Bakken (centred on North Dakota) and Canada as it would provide expanded connectivity to the Gulf Coast, but also for U.S. refiners as it would provide security of supply from a longtime energy provider and trading partner," he said.
The Calgary-based company, Canada's largest oil producer by market capitalization, says it has 600,000 barrels per day of current access to world markets, including 80,000 bpd of rail loading capacity, as an alternative to the 830,000-bpd Keystone XL.
Analyst Stephen Paget of FirstEnergy Capital said the rejection will lead to more crude-by-rail shipping, a transport mode which has expanded enormously over the past three years despite higher costs while KXL awaited the presidential permit required for a pipeline that crosses the Canada-U. S. border.
"This is about positioning ahead of Paris (climate talks)," he said. "The fact-that-must-not-be-named, of course, is that U.S. oil production has gone up by four million barrel per day, which is more than Canada produces. That fact is unmentionable right now and Obama can move forward with this air of having done something about climate change ...
"It's a rejection of Canadian oil with no corresponding rejection of other oil."
Paget said rail shipping declined over the summer as pipeline "workarounds" came on stream but he expects it will rise again as Canadian oil production increases, driven mainly by new oilsands production.
Paget covers TransCanada, a company which has commercial support for $35 billion in projects, including the $8-billion Keystone line.
"It's never good to lose an application on a major project. But they have been preparing the market to some extent for this," he said. "They said last year they would accelerate their dividend growth rate by eight to 10 per cent through 2017, with or without XL."
TransCanada president and CEO Russ Girling said in a statement Friday the denial is a result of "misplaced symbolism" and that "rhetoric won out over reason." He was not available for interviews.
He pointed out the U.S. must import seven million barrel of oil per day to meet demand in spite of higher domestic production, adding that the decision deals a damaging blow to jobs, the economy and the environment on both sides of the border.
"By dismissing the 9,000 jobs for Americans building Keystone XL as 'only temporary,' the administration has ignored the value of infrastructure jobs and has taken away work from those who seek it. In total, some 42,000 related jobs would not be created in the U.S. value chain as a result of this decision," the statement reads.
Tim McMillan, president and CEO of the Canadian Association of Petroleum Producers, said Canadian oil will find new paths to markets and continue to create jobs and wealth for Canadians, despite Obama's political decision.
"The Keystone XL pipeline deserved to be approved on the facts of its environmental, economic and energy security merits," he said.
He pointed out Alberta set greenhouse gas emission regulations in 2007 and recently increased its carbon price. Among the top suppliers of oil imports to the United States (Canada, Mexico, Nigeria, Saudi Arabia and Iraq, Venezuela), only Canada has GHG rules in place, he said.
Mike Tims, vice-chairman of Matco Investments Ltd. of Calgary, said its difficult to say whether the Keystone rejection on its own will affect the energy investment climate in Alberta. But he conceded higher costs associated with rail transport aren't good for an industry already suffering from low commodity prices and poor access to capital markets.
The Calgary Chamber of Commerce, whose members have been side-swiped by oilpatch layoffs and restricted spending due to low commodity prices, issued a call for Canada to push through pipeline projects to bring oil to coastal export points.
"The rejection of Keystone XL by President Obama shows the further need for Canada to take our destiny into our own hands," said president and CEO Adam Legge. "As Canadians, we need to work together to find the solutions that will get our products to tidewater, now with an increased focus on those projects that live exclusively within our borders."
Canadian Natural Resources Ltd., Canada's largest producer of heavy oil, is one of the few identified committed shippers on Keystone XL. A spokesman said Friday the company would not comment on its rejection.
"If the decision had been based on facts and science, then we believe Keystone XL would have been approved," said Reg Curran, spokesman for thermal oilsands producer Cenovus Energy Inc., in a statement. The company has contracted to ship 75,000 bpd on the pipeline and has 70,000 bpd of rail-loading capacity an an Edmonton-area terminal it bought this year.
The lack of transport capacity has made new oil projects in Canada less attractive - Royal Dutch Shell Plc last week said market access was a factor in its decision to shelve its 80,000-bpd Carmon Creek oilsands drilling development in northern Alberta.
A Fraser Institute study released in August showed moving oil and gas by pipeline was 4.5 times safer than moving the same volume the same distance by rail in the decade ended in 2013 in Canada, although both transport methods were considered low risk.
Emerald ain't doing well - maybe taking them over would provide us a big boost.
Emerald Oil, Inc. (NYSE MKT: EOX) ("Emerald" or the "Company") today announced that, effective as of October 6, 2015, the borrowing base under its revolving credit facility has been decreased from $200 million to $120 million as part of the Company's regularly scheduled semi-annual redetermination by its lenders. The previously announced term loan facility was not consummated, and the Company proceeded with its regularly scheduled October borrowing base redetermination. The decrease in the borrowing base has resulted in a deficiency of approximately $19.6 million. Emerald and its advisors are negotiating with the bank group regarding a repayment schedule and continues to work with a group of second lien term providers for a term debt solution.
Hard to get excited about huge percentage gains when share sunder a buck. Example: Say a stock is at $10 and you lose 95%. You have a 50 cent share price. Then you get an amazing 100% gain. Sure your shares are at a buck, but the 100% gain did not exactly reverse the 95% loss.
MLPs pay distributions out of distributable cash flow. The distributions are required, and governed by the terms of the ocntract between general partner and limited partners (investors). I don't know what the actual tems are or if they were changed in the new reorg - I really don't think so as we just got CEQP shares and there was already a contract between CEQP general partner and invesors. MLPs pay their investors through quarterly required distributions, the amount of which is stated in the contract between the limited partners (the investors) and the general partner (the managers). Typically, the higher the quarterly distributions paid to limited partners, the higher the management fee paid to the general partner. This provides the general partner with an incentive to maximize distributions through pursuing income-accretive acquisitions and organic growth projects. Failure to pay the quarterly required distributions may constitute an event of default.
They do not pay a dividend. The distribute some of their income to the limited partners (on a K1 form) as required by the MLP rules that allow them to NOT pay any taxes.
They can't "leave aside the distribution". They get to be an MLP and pay no corporate taxes because they are REQUIRED to pay most of their cash flow to the partners (ie unit holders). They can reinvest some to maintain and even slightly grow, but they cannot re-invest it all. And they have to borrow to grow enough to keep increasing the dividend. That is how it works. If they were organized like a corporation they could use all the cash flow to pay down debt and grow profits. Then they would have to pay taxes. And they would pay dividends and not distributions on a K1 form.
Includign all the newly vested options, what percent of the company will Keith own?
If there is major upgrade on a big down day. It is often protective and the stock does not participate in the big from. However if the upgrade occurs days to a week before the big down day, it generally has no protective effect. Go figure.
Borrowing base is not the problem. Problem is whether cash flow at urrent prices will cover the moly mine costs including operatin the water treatment plant. With most small oil companies it is debt service that is the worry. While USEG has little debt, they have obligation to provide for the Moly mine operating expenses. .
Algerian dropping CMLP from index on Sept 18. But they don't bother to include on the press release that CMLP is going away on Sept 30, so of course it won't be in their holdings and it won't be in any index. Duh. Price action truly terrible.
So far this reorg plan does not seem to be adding to shareholder value. And it is their fiduciary responsibility to maximize shareholder value. Do they have to take another look at it?
Crude oil take away capacity depends on rail deliveries to coastal refineries to remain adequate.