I've never been into chart analysis, but after an insider bought shares a few weeks ago, plus in the last six weeks the analyst increased his earnings forecast two different times covering his estimate for the next two quarters, I'm scratching my head wondering what the problem is.
If there's any fundamental issue, it hasn't been disclosed yet other than maybe lower oil price concerns.
Q3 & Q4 both increased from 4 cents to 5 cents eps for both quarters.
But the full year estimate for 2015 is revised downward from 30 cents to 23 cents. Per Yahoo.
If the company decided to abandon the moly mine, it might also be able to close the water treatment plant. So don't assume the obligation is permanent. However, your point is well taken that the liability could be large.
I countered offgrid on this, not that I can assume he is wrong. He might be right. But my point is that the company has not impaired the asset or recorded any liability. For those who blame Keith for everything, remember that independent accountants also approved this analysis for the last year end.
I wouldn't worry much about the FDA warning by itself. Paciria needs to change its advertising claims to be consistent with the FDA approval of 24 hour pain relief, not 72 hours. I don't believe there is any fine associated with the warning.
What isn't known is if the advertising change would have any impact on Exparel's future growth, probably not but who knows.
As for the leaches, I mean lawyers, they are only doing investigation for class action, I don't believe any lawsuit has been filed, and with the minor decline in share price so far, I expect any legal activity to be abandoned.
The company currently represents the moly mine on the balance sheet as a mineral property asset valued at $22,000,000. In addition, the company has been spending about $2.8 million annually for the water treatment and mineral holding issues, not to mention the extra administrative overhead going on to manage the mine.
If what you say is true, that the moly mine will bring in only $15-30 million from royalties over a several year period, then that property needs to be impaired.
In addition, the company probably needs a separate charge creating a liability for the annual operating costs that won’t ever be recovered in a form of revenue.
It’s pretty difficult to understand how a stock like USEG could fall so much below the fair value of its assets.
Even the moly mine you mention has some value, and although I don’t expect it resolved near term like you imply should happen, it seems the company is working on a solution. I’m guessing it gets monetized
in two to four years.
There’s no cash flow problem at USEG. Likewise the market, while disliking oil companies is not in any panic like it was in 2008. All I can imagine is that USEG is misunderstood. It has the oil business and it has the moly mine which you dislike. The moly mine reduces EPS by 12 cent per year. So let’s say we got rid of the moly mine (but for $100 million), then after that $78 million profit, we are left with a profitable oil business.
The biggest money making period of my investing career occurred during the financial collapse when companies went far below their basic rational value. Eventually reality set back in and some of these companies rebounded three to four fold. I plan to hang around and wait for fair value USEG.
If what you've heard about the second drilling rig is true, that is huge. They could bring six new wells, or more, online per quarter at that rate.
There’s been lots of criticism of Keith lately, and while I personally don’t know much about him just look at some of the recent moves by the company.
-Lined up the Buda deal with Contango/Crimson
-Made a new deal with a mystery partner
-Sold some Bakken properties for a great price, netting $11.5 million
-Made the deal on the uranium mine that could be worth $5-10 million
-Seem to be making proactive moves on the moly mine.
True, the share price has been a disappointment and more recently a disaster, yet it seems all the right moves are being made to get better shareholder value. So if it isn’t Keith doing this, who gets the credit?
My basis for investing is to consider undervalued firms on a fundamental basis. In the case of small oil companies, it seems like their asset value is the best measure of worth because it is a predictor of what the future earnings and revenue stream will be, at least that is my opinion.
So on a conservative basis, let’s say the Anfield deal is worth $5 million (discounted for risk and time), let’s say they get rid of the moly mine for $22 million (book value) and let’s say the new PV-10 is $150 million (book value $86 million) and let’s say the other assets and liabilities are a wash that cancel each other out.
Add the $5 million, $22 million and $150 million, you get a theoretical market cap of $177 million which ends up at about $6.30 per share.
The wild cards are the moly mine and the real value of the South Texas wells, both which could be worth considerably more than my assumptions.
While some data is more meaningful than others to the bottom line, I like seeing it.
The Bakken stuff they post still shows a story. Like you can see 3 year old wells with cumulative production over 150,000 still pumping away steadily at about 100 boe/day. Some of those wells might go on for another 10-20 years.
The stuff you call micro analysis allows us to forecast production over the next few quarters. While USEG's last quarter came in at 1280 boe/day, the next quarter is likely to have an average in the 1500 to 1600 boe/day.
If you've been doing any recent micro analysis of Earthstone, you would know they are in danger of reporting up to a 20% decline in production for the quarter ending Sept 30, 2014 vs the last one that ended June 30, 2014.
Will you be funding it with a quick profit from the $25K you claimed to invest in LEI at 51 cents per share, or did you ride that one up and back down?
I'm wondering if that COO will be operating out of Riverton, WY, not exactly a location that attracts the headquarters of publicly traded companies.
IMO, we are not yet done with the management shakeup. Lots of good things have happened in the last few months, maybe a few more to come.
----Deep digging in its data-base---
Hmm, I wonder if that statement was intended to acknowledge anyone in particular?
What kind of sales would you expect for the next couple of quarters?
I've also noticed the trend over the last few months. In fact capital expenditures were backed down in the quarter ending Dec. 31, 2013 and so far haven't rebounded. Also noticeable in the July figures you posted, the average well produced only 17 days, 940 production days/55 wells. That's less than normal.
While it shows how vulnerable a small oil company is to the operator, your comment about---saved by Oak Valley is valid. I suspect with all the cash and bigger size of the merged company, they have numerous options to deploy that cash. That means they are not dependent on Statoil for their livelihood.
While I don't personally know if there is a qualified family member waiting to take the position, I have confidence that there is an independent BOD that will do the right thing.
With all the changes since last spring, the company seems to be trying to bring some shareholder value....More good Buda acreage with a mystery partner, sale of Bakken property at a profit, heated negotiations regarding moly mine, new cash potential out of written off uranium mine, now the resignation of Mark....it's been wild.
Quite frankly, I am shocked that the share price hasn't reflected the good moves. Likewise, I wouldn't be surprised if a few more major changes are announced within the next 12 months.