Fits the Chip Hazelrig accident story. The question is was the Hazelrig family unloading their less than 5% remaining position in EQU in mid March or was the spike in sales (4.8 M shares) just an artifact of gneral lost confidence in the Petroflow deal getting accomplished. Remembering the original Montclair 13D,"Chiip" Hazelrig's family was widely involved in the reported ownership of Equal. I dont recall the Wedell position which may be a constant in the Equal long run story , if indeed the acquisition was his idea.
As I have stated previously I am no longer an EQU holder but may reenter the position if it corrects to 4 or below as I believe at those levels it again becomes a compelling value. My guess is that the lack of
any information relative to the Petroflow acquisition from either Equal or Petroflow seems to be not normal and a compelling reason to believe something is amiss in the closing of the deal.
No one knows the state of Monclair holdings as they reduced their ownership to under 5% last fall and no longer have to report any further sales. IMHO if the Hazelrig injury story is true and occurred in early Feb 2014 as the Google searches seem to indicate the big selling spike the week of 17 Mar could well be the family
locking in their gains as "chip" will be incapacitated for the foreseeable future. The price volume dip looks similar to Nawar's sale earlier in the fall. I currently have no postion in the stock as I decided to eliminate
all shares when past my long term gain date. May possibly reenter if shares fall to 4.00 level or lower on
failure of Petroflow to get financing.
Found this on Google " Please pray this week for Betsy Eldridge's uncle, Chip Hazelrig, who is
recovering after a motorcycle accident last month. He has a broken neck
and back. For now he is paralyzed and doctors are hoping in the future he
will recover enough to walk using a walker. Please keep his wife Lynn
in your prayers also."
The intrinsic value of EQU was widely discussed over the last year. My take on all the discussions is that the depreciated value of the land and infrastructure, the net asset value per share on 31Dec was $4.45. This does not include the value of reserves and is far below the replacement value to
conduct business at EQU's current level of operations. The present value of the discounted future cash flows from the proven reserves (PV-10) on the same date was reported #$%$38 per share for
a diluted share count of 36,540,000. One other estimate of share value was done by "Value Digger" on Seeking Alpha last fall and as I recall his thesis was based on a 7X r multiple of cash flow found at comprable E&P's. His valuation was around $6.40 per share with no buyout premium.
Silence is mandatory when you dont have somethng posative to say. IMHO something is not right and that is reflected in the relatively high volume sell off over the last week. The clock is running out and I am wondering who can possibly benefit from what appears to be an orchastrated uncertainity moving the share price lower...Eqal insiders are clearly restricteed from any trading by the agreement. Not sure about Petroflow or its insiders or the large contingent of financial horse holders and food tasters involved in various aspects of the deal or their friends and relatives.
The silence relative to the negative accounting controls information on the part of both Equal and Petroflow appears to indicate there is some new negotiation underway....not surprising given that Equal has provided a
new leverage tool to Petroflow...Market is doing its thing discounting the Equal shares for added uncertainity.
My take is the longer the uncertainity continues the greater the discount will be applied.
My inclination is that there is selling pressure on LNCO shares from Berry holders monetizing their
rewards of the sale. This also will pass with time.
Here is the rest of the cut off paragraph:
In addition, the Company did not design and implement appropriate review controls related to recognition and measurement of stock based compensation and asset retirement obligations.
• The Company did not design and implement appropriate controls over the completeness, existence and accuracy of accrued liabilities and accounts receivable related to its ownership interests in wells being drilled.
• The Company did not maintain effective internal controls over information technology systems to properly restrict access to record manual journal entries, including the review and approval of manual journal entries.
Price drop appears to be related to the following screw-ups (copy of post from private EQU Board):
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for Equal, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934. Under the supervision and with the participation of Equal’s management, including our principal executive and principal financial officers, we conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) inInternal Control – Integrated Framework (1992). Based on this evaluation, management has concluded that, as of December 31, 2013, the Company’s internal control over financial reporting was not effective due to the material weaknesses described below.
A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. In connection with management’s assessment of internal control over financial reporting as of December 31, 2013, we have identified certain deficiencies in our internal control over financial reporting that we deem to be material weaknesses, as described below:
• The Company did not maintain a sufficient complement of qualified personnel with U.S. GAAP knowledge necessary to ensure appropriate accounting for share-based compensation (including modification of awards and timely recognition of expense), calculation and recognition of changes in the asset retirement obligations and evaluation of information related to a production tax incentive program. In addition, the Company did not design
The filing indicates to me Joel Tillinghast and his team still think this is a "Value" play worth a bigger investment. Like most I like it when my own value thesis has some level of
confirmation by professional value managers. It has also been my experience that it takes lots of time for "Value" situations to overcome the negative perceptions that got them where they are unless they attract the interest of some other company that wants to
grow at a bargain price. SFY is a small E&P and as such must show eps, reserves and production growth to be in demand in and of itself. The current perception seems to be
that they are just marching inplace and going no where.
The filing indicates the shares were bought for the Fidelity Low Priced Stock Fund which is a "Value" oriented
fund run by one of Fidelity's legends....Seems to be this is a vindication of the Swift undervaluation thesis. I
dont ever remember FLPSX engaging in any activist flaps so it seems like a straight forth purchase of an undervalued stock.
13g indicates purchase by Fidelity was for FLPSX (Fidelity Low Priced Stock) one of the best all time perfomers for the Fidelity Group run by
a legend by the name of Tillinghast...That seems to be pretty solid vote of confidence in the "Value" thesis. good news.
Yes but they have a multitude of other taxes applied to Energy and your K-1 reports your individual share of the trust payments to the State of Texas for some taxable reason...that is what I am trying to find out to avoid any non reporting penalty. I think it has something to do with a thing called the "Franchise Tax" but cannot confirm.
i also finally packed it in when it became clear that the risk/reward ratio of holding for the small discount to
the Petroflow offer was not worth the loss of the sizeable long tem gain already established. Thanks to Nawar and Adam I kept accumulating thru the post Strategic Review slump and then subsequently sold all but a few thousand shares over the next 12 months. Seems to me the best the court challanges can achieve is to nullify the Petroflow offer and that will create a price vacuum for EQU shares. If that happens I might buy some more again if the shares tank. I dislike the management but the Hunton appears to be a low risk long lived cash cow.
I believe SFY is a DEEP Value stock. Last time I looked the book value was$24.71 per share. For an E&P book value is strictly the depreciated value of the infrastructure which has a much higher replacement value.
The energy assets are best valued by the PV-10 which based on last years numbers was $2.284 Billion. If you subtract the total debt from the total PV-10 and divide by the number of shares you find SFY has a proven reserve future cash flow value after payment of its debts of $26.82 per share. The company is obviously struggeling with current Cash flow growth and has acheived a negative perception in the market that loves small exploding growth E&P's. This one is a treasure chest of undervalued proven reserves and IMHO they will become of interest to some entity that wants to acquire undervalued energy assets. This is an exercise in patience and keeping the faith with the valuation metrics, not a whiz-bang quarterly growth story.
As I read the financials this stock is a very undervalued situation. Their last reported PV10 was 2.3B with their total debt of 1.12B leaving a net value of1.18 Billion divided by 43.4 Million shares results in a per share value of future earnings of $27.18 per share. On another basis they have (2012 year end) 192.1 MMBoe of proven reserves. Divide that by the 43.4 million shares results in a proven reserves per share of 4.5 boe. The problem is that undervalued stocks are in the doghouse due to
past mismanagement and it takes time and events to change the market perception. This is the land of recgnizing intrinsic value and waiting until others recognize it..
Yahoo indicates insiders own 3% and largest single share owner is Fidelity Low Price Stock Fund at just under 10%. This fund is regularly one of Fidlelities best performers under the management of one of their