Jump to content

Recommended Posts

Illiquid post-reorg energy company with Tier 3 assets, but I think it is the cheapest play in energy right now. 


There are 12mm shares at $14/each =  $170mm market cap plus c.$90mm net debt = $260mm TEV.   


23,000 boe/d production that should generate $100mm of EBITDA at $55/bbl oil.  Out of the money hedges probably remove $20mm from that number.  Let's assume PDP PV-10 at $300mm at current pricing, net of hedge liability.


14 AC drilling rigs with replacement cost of $280mm.  Worth less today.  Let's use 5x run-rate EBITDA or $75mm, but plenty of torque if the rig market spikes. 


50% interest in midstream JV that is probably worthless due to liquidation preference held by JV partner, but Unit controls it, so maybe there is some control/holdup value.  Let's add $20mm of option value.


That all adds up to $25/share.  Should de-lever meaningfully this year, so downside is probably limited at these levels.  I have no opinion on the management team, but G&A seems reasonably low.  Biggest risk is probably reinvestment of cash flow into bad acquisitions. 



Link to post
Share on other sites

I've poked around on this a little. Agree there is value, though the oil & gas assets are higher decline, so the updated production numbers will be critical once released. Any view on the timing of a relisting on an exchange? I'm not sure what's typical in this scenario.

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...