A normal trading volume for a company is just a little over 2% of outstanding shares per day. Applying that ratio, only about 100,000 shares are in an active trading pool. Of the remaining 9,900,000 shares, many are held by former common holders, but most are in the hands of former creditors. They are certainly holding back in anticipation of something.
Nabors may be negotiating the purchase of CJES assets, at a deep discount to book, in a prepack. They just have to get the unsecured creditors to take less than 50 cents on the dollar. Common is, of course, toast.
A judge will only form an equity committee if he or she believes that there is value in the company in excess of the amount required to compensate higher priority claims. The reason is because the expense for an equity committee is paid by the company in bankruptcy, not individual stockholders acting independently. No judge will authorize this expense if it's expected that the costs for same will end up being paid by the creditors.
Equity committees are quite unusual. Once formed, it's equally unusual for existing common stockholders to receive nothing once the bankruptcy is resolved.
If the judge agrees to formation of an equity committee, it will indicate that existing common holders will recover something after all the higher priority stakeholders are satisfied. Postponement may be a good sign. In other words the judge may be favorably inclined, but needs more information on how this is going to shake out.
Fifty dollars a barrel is not enough to dramatically increase drilling activity such that lenders would feel comfortable. At this point, the best that CJES can do is an agreement that would provide some equity in a reorganized company to current stockholders.
If trading normally, SWTF would have volume of about 200,000 shares a day, instead of 1000. When that happens, we will get a true picture of the value of the company.
Yahoo can't even run its own company properly. Why would anyone consider their opinion on energy matters to be worth the time of day?
If Yahoo is to be believed, slightly over 50% of the common is owned by insiders. That creates a very strong incentive to stay out of bankruptcy. On the other had, any company with the same financial condition and near term prospects of CJES is assuredly a good bankruptcy candidate.
Another consideration is that CJES holds primarily physical assets that are almost impossible to liquidate in the current environment. So a fire sale in bankruptcy would salvage fairly little for creditors and may not be nearly as good as keeping the company in operation. A prepack in which creditors take most of the company as compensation for pain and suffering is very likely.
Both the common and the preferred shares are being cancelled. If the judge decided to push for a recovery by any stockholders, it would, at best, benefit the preferred only.
Creation of new orders for over water rigs is the key question. After this painful pullback in oil prices, how risk averse will E&P companies be? What will it take to provide adequate assurance that their investment will be recovered? I'm guessing that over water drilling will be the last to recover.
I believe that the future of this company rests on its ability to renegotiate some credit arrangements. A claim of default due to a low EBITDA was delayed until May 31, 2016, to enable negotiations. We should know more in the next week.
Insiders have such a large percentage of the outstanding stock that there's a big incentive to find an arrangement other than BK.
The conversion kits have been around for a long time. One problem is where does one put the high pressure tanks? If you're converting a truck, it's pretty obvious. But it you're converting a Mustang?
The energy density of natural gas at the same pressure as propane is 65% less per cubic foot. So it takes much more pressure, or much larger tanks.
The Greeks called the same fractions the Golden Ratio. Fibonacci discovered something that had been known for over 1000 years.
I'm thinking of inventing the telephone.