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.
I can't think of another small operator that would merge with them and take responsibility for resolving the Moly mine issue. It would be fiscally irresponsible and no board would allow it. Therefore while is sounds like a great idea, USEG cannot merge with another small operator and let them run the show.
Metal mining. The commodity boom is over and most metals prices have been in retreat over the last three years. Thus far those declines have been measured and orderly, and some new projects in Montana remain under active consideration. But the sector is unlikely to contribute to growth in 2015.
Don't really see how anything can happen with Moly mine at the moment.
You also get the Moly mine - company can't be sold until that is resoived - no one would buy it.
Anyone who thinks they are getting 18.75 is nuts. That was a value calculated on the price of CEQP before the announcement. It represented a premium if the price at the time of the announcement stayed the same. It didn't.
However they fail to address two questions.
They were naked on hedges when oil proces crashed, except for 10,000 bopd hedges they picked up from ATHLON.
They have also layered on 55000 bopd hedges at $62 for rest of 2015. That one has yet to play out but could set them up for big losses later in year.
Transparent financial reporting requires soem discussion of these items. They made BIG money last few years on hedging strategies but they seemed to have been caught naked at the top of oil prices and possibly loaded up at near the bottom.
There will be few positives for the 1st quarter including the expected Deep panuke windfall from huge algonquin city gate (Boston) procing over the first three months of the year. They also may make some announcement about Haynesville. Hate to see them leave that jewel behind (they can ramp production there anytime they want to 2 BCF) but it has been surpassed a little as pure gas factory by the Marcellus and they also have other huge sources of gas, particularly in Canada. If they get top dollar I guess I am okay. Especially if they can do some bottom dollar bargain bolt-ons in the permian.
Or oil treads water. But USEG goes down, down, down. Some resolution of the Moly mine situation might help. Predictable growth in production would have helped but that is about to end after one quarter where we topped Q3 of 2011. There will be big fall off in Q 1.
Do some math. HK North Dakota acres still worth huge dollars.
If Mike Kelly had the SLIGHTEST clue he would have told us the $60 was the new $90 when oil was still at $100, before oil dropped like a rock. Absent that, I see little reason to give any weight to his views about where oil prices will head from here.
Will release be after market tonight.
Will release be before market tomorrow.
Why didn't USEG pre-announcement press release include that detail, one of only two things they had to communicate (the other being the time of the conference call and how to access it)