IMHO the next big thing in the oil E&P sector will be the big well capitalized fish feasting on the
small fish with great assets, i.e. it is quickly becoming more advantageous to buy production and reserves v ice develop same. Just like all the other "busts" there will be many "Fire Sales" , especially for the financially strapped targets.
"On Fire", the whole oil secotor is on fire and the current perspective is that it it is burning to the ground. The Question for everyone is: When and how fast to return to these stocks, DNR is not exception. Broad Perception is everything as evidenced in the time honored maxim that market can stay irrational longer than you can stay optimistic. DNR currently has a lot of company in the doghouse and it appears barring some
unforseen disruptive event the oil companies are not going to recover for a long time..
At the currently discounted market price they can just buy up all the true float and then take over the BOD for around 300M. Why pay for a JV?
What is "Oil Weekly"? Does it have any paid subscribers or is it some freebe advertising media? He sure as He** is not number one on the Yahoo Daily SFY MB.
Unfortunately this is probably the worst time in the last few years to be negociating an energy property deal.
SFY appears to be once again trying to play catch up using the family jewels to get operating cash.
I guess the real teaser is : was there another large buyer in the mix for the Baker St. Share dump?
It it interesting to see Baker St. dump 10 million shares or about 1/4 of the total shares outstanding in such a short period of time whithout completely deflating the share price. Since they never took any steps to back up their tough words all they acheived was attracting the legal vultures. Possibly the circling swam ofl legal vultures will attract some serious financiial predatosr to the undervalued SFY meal.
It appears to me to be a bookeeping entry to account for the carried valuation of divested unproved reserves that were part of one of the recent property transactions. No cash changes involved and my focus is on cash flow which appears to me to be very safe for sometime to come.
IMHO the real test is if Baker St. bought more in the Oct low period. My key date is 1 Dec for any potential
additional SEC report given the 30 requirement. Since there has been no announcment of any Standstill I assume they are still free to collect shares at prices that are a bargain to their reported holdings. The Nat Gas
price rise bolsters their "Value Thesis".
This list describes an overwhelming potential vote against the current management if there is a viable, more profitable alternative on the table.
Near term we have to endure individual tax loss selling. The only thing that I can think of that may support price is if Baker St files an additional 13D sometime in the next few weeks. That would indicate they are not fhru yet and serious about forcing a change. The fact there has not been some
announcement of a stand still in exchange for BOD seat nominations in the next election period is
still a posative stiuation. Overall I think the market negativity for energy companies is over done. It appears to me that the only product in excess supply is light sweet oil which is not what our refineries are geared up to use except to blend with heavy oil. That situation could be changed
over night if export restrictions were lifted as recently done on minimumly processed condensate.
In addition, Nat GAs prices are firming and back over $3.90 this AM. I also believe that there will be a great deal of weight put on the amount of hedging SFY has in place when the Q-3 info is released.
It's my understanding that the Institutional holdings include options. Options dont require equity backing and are just created based on demand and the willingness of a counterparty to cover the contract.
Yahoo finance shows instituional ownership at over 100% of float which is only a meager 43.4 mshares to start with. This very low net float appears to be a significant factor in the seeming directed movement of the share price in both directions over the last year.
Baker St. appears to have company- Found following quote on insidermonkey:
"Despite this underperformance, other major institutional investors, like Chuck Royce’s Royce & Associates and Israel Englander’s Millennium Management are also betting on Swift Energy Company (NYSE:SFY). Royce & Associates last disclosed ownership of 1.52 million shares (as of July 30, 2014), following a 3% increase in its stake, and Millennium Management started a position over the second quarter of 2014, with 95,564 shares."
Relooked at Moringstar and noted Price Cash Fow ration for SFYis 1.0 while the industry is5.3 or over 5 times higher. Price sales is 0.5 and the industry is 2.2 or 4X higher. The PriceBook is 0.3 with the industry at 1.7 or 5X higher. For small E&P's my favorite metric is cash flow as they have huge amounts of non cash costs
which distort the real earnings power of the company.
Assuming 7/share that would lower the float by 7.1 million shares or to 36.3 million shres of whichBaker Street owns 4.3 million. The company would be putting the activists in a stronger voting position with their already reported holdings. I doubt we will see any buyback without some agreement with Baker St. I'm betting that SFY offers Baker St. some board seats in return for a standstill to buy time..
I believe the market is waiting for the next shoe to drop, IMHO if Baker St contiues to buy at this very depressed price....we will likely know in the next 30 days if there is another 13D. Think about it why wouldn't they if they really want to push for board seats? They managed to scoop up 10% while the shares went down and now the price continues to languish at a low valuation even after their pulling a big chunk out of circualtion and announcing their intentions.
Based on the schedule A of the 13D filed by Baker Street since 8/21 they purchased 3,975,634 shares for
$36,801,932.39 or an average price for these purchases of $9.26. There is a difference between the total reported holdings of 4,381,336 reported on the 13D and the purchases of the last 60 days of 3,975,634 in the amount of 405,722, which I assume were purchased prior to the sixty day period of the schedule and most probably at a price greater than $9.22.
When this 13D is taken with the over 100% of float reported as institutional holdings in Yahoo finance seems to me the small management holding totals gives Baker Street a lot of leverage in forcing changes if they are willing to wage a proxy fight.
Roughly 6 months until next annual meeting. I expect Baker Street to have an alternative slate of
directors if SFY doesnt take some value enhancing actions. Hopefully, the Baker Street
13D will attract some more attention from Value players. I take comfort in the fact that Fidelity
Low Priced Stock Fund holds a large postion and has a very successful manager.