Author Topic: PWE - Penn West Petroleum  (Read 421229 times)

SharperDingaan

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Re: PWE - Penn West Petroleum
« Reply #1310 on: April 02, 2018, 09:46:45 AM »
Lots of goodies in here - we feel like a kid on christmas day!

Overall interpretation:

1) The Viking and PR asset sales will create large receivables, against which they have received bank financing (implied)

2) Post RS, OBE was thinking 168M o/s. The implication is that a buy-back of around 336M shares (approx CAD 500M) financed against asset sales & the IV gain on shares bought < BV - would get them to the same place. Our own thoughts are that it will actually be less than this, and that the NYSE listing will go once it's done. "The Company intends to apply for a Notice of Intention to Make a Normal Course Issuer Bid (the "Bid") with the Toronto Stock Exchange (the "TSX")"

3) We would expect that discussions are already underway with potential targets, they are probably going to be successful, but they (& everybody else) had to be informed as to surrounding circumstance. No different to buying a new house, conditional upon selling the old house first. Most would ASSUME the targets are going to add more than the 7500 boe/d being sold, & cost less to develop/boe than what is being sold. We would also expect that of the 12,000 boe/d in Q1 hedges rolling off, they will roll over no more than 4,500 boe/d (12,000 - 7,500). "we are actively reviewing industry consolidation opportunities with significant synergies and a focus on creating a company with best-in-class operating performance"

4) Early days yet but Cardium may still end up being too big for them to develop on their own - especially if they also have an elevated debt level. We rather suspect they have a partner and a means of reducing the debt once the dust settles.

All in all a good day, and we wish them luck.

SD



   
« Last Edit: April 03, 2018, 05:00:50 AM by SharperDingaan »


jrallen81

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Re: PWE - Penn West Petroleum
« Reply #1311 on: April 02, 2018, 12:27:05 PM »
what was the plan to "consolidate" the shares - reverse split?

Joe689

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Re: PWE - Penn West Petroleum
« Reply #1312 on: April 02, 2018, 12:41:13 PM »
Yes, RS was the original plan.  Amazing to see MGMT flip flop to such a large degree.   Signs of panic to me.   This story just keeps getting more and more bizarre.  We will hear from FF soon and can't wait to hear their comments.   I was always behind MGMT but they seem like reactive amateurs.   I expected a bigger rabbit to be pulled out the hat and not just playing to the exact tune of FF.    Is it all AGM strategy.  Play to FF tune, set the meeting and record date very close, and try to pull off the votes.   

Maybe MGMT has been fighting off a bid and is acting very erratically.  The "natural next step in our ongoing strategy" is quite a choice of words considering all other communications of plan having nothing to do with this.  "Natural next step" or doing a 180?

And still have trouble putting meaning to "conclude" viking deal in Q2.  Best guess, is that we are in the later stages of bids.  but why not give guidance on deal metrics and where the money will be sent.  If it was the "natural next step" wouldn't you have a good idea of a more detailed plan with the proceeds?

Still find things very ODD.   I used to think that MGMT had a master plan but unsure anymore.  Can't put my finger on what is really going on with this Alberta company

SharperDingaan

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Re: PWE - Penn West Petroleum
« Reply #1313 on: April 02, 2018, 01:50:12 PM »
Our own guess is that in the boards dd process, managements development plan failed to 'come out on top' re the alternatives; hence we're now executing the alternatives (not neccessarily the FF suggestions). Nothing wrong in that, and if the process pulls in a competing bid - so much the better. As shareholders we end up with the highest and best price, all we can ask for.

The facts are that OBE itself is now an EXTREMELY attractive take-out target. 30,000+boe/d of proven light oil reserves that can be bought for cents on the dollar, large numbers of great drilling targets, Cardium acerage alone that is a company maker, & much of the transaction would be self-financing (Viking & PR sales). Any kind of reasonable cash and paper offer would very likely take the show.

The Viking language suggests they have a MOU; and expect to announce a sale in Q2, that would most probably settle sometime in 2H2018. Our guess is that much of the search for the buyers was done by FF, and that existence of the Viking and PR negotiations HAD TO BE ANNOUNCED - as they are pertinent to the coming proxy vote. If it occurrs.

While our preference is that they remain independent - ultimately it will be market determined.
Again, all that we can really ask for.

SD



 

roundball100

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Re: PWE - Penn West Petroleum
« Reply #1314 on: April 02, 2018, 02:05:47 PM »

[...] The facts are that OBE itself is now an EXTREMELY attractive take-out target [...]
 

If this is so obvious, why aren't people buying up the shares hand-over-fist ... very hard to understand the disconnect between such optimism and market pricing.  And for such a long period of time. 

SharperDingaan

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Re: PWE - Penn West Petroleum
« Reply #1315 on: April 02, 2018, 02:20:52 PM »

[...] The facts are that OBE itself is now an EXTREMELY attractive take-out target [...]
 

If this is so obvious, why aren't people buying up the shares hand-over-fist ... very hard to understand the disconnect between such optimism and market pricing.  And for such a long period of time.

The usual WCSB suspects don't have the cash, & could only do a paper transaction; with the Viking & PR announcements that's much less of an issue now. Mid sized Cdn o/g producers have also been perceived as utter sh1te, ever since new pipeline capacity got taken away. The NA o/g 'story' is also only about the Permian - & not the WCSB. This is the leper colony.

SD
 

Spekulatius

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Re: PWE - Penn West Petroleum
« Reply #1316 on: April 02, 2018, 03:55:54 PM »
So pretty much everything is for sale?  Viking, PR for sure.  And looking for a potential merger? 

And viking to "conclude" in Q2.  Does that mean, we already have a buyer?  Or we still now accepting bids?  Sounds like the latter.

Be interesting to hear what FF has to say.

Anyways, MGMT seems to get my investment thesis.  "sum of pieces".

If the value is there, you dont need a takeover thesis to make the stock work. If you need a takeover thesis to make the stock work, itís  not a value stock. Just my opinion.
To be a realist, one has to believe in miracles.

Pelagic

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Re: PWE - Penn West Petroleum
« Reply #1317 on: April 03, 2018, 05:22:43 PM »
New letter out from FrontFour

https://ca.finance.yahoo.com/news/frontfour-formally-provides-advance-notice-221600923.html

The four current directors on Obsidian's board that FrontFour has "targeted" have a rather anemic total equity stake. I don't see a compelling reason to vote for them as opposed to FF's chosen directors. OBE has conceded everything FF asked for in terms of strategy, might as well get some board members in place with experience in the industry.

Joe689

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Re: PWE - Penn West Petroleum
« Reply #1318 on: April 04, 2018, 08:18:52 AM »
At this point, things are so broken.  Shareholders broken, plans broken, egos broken, etc....   Going forward things do not look much prettier.   MGMT probably has already started to turn on each other and are likely very divided.  Furthermore if FF wins, they will gut MGMT. No matter who wins, shareholders will remain divided and sour.    Who wants to invest in this mess?

This company and its shareholders have gone through too much pain.  The right thing to do is end the pain.   Long term plans should go out the window.  Auction the entire company, or separate assets.  I do not care who does it.  Current MGMT or FF.   

siddharth18

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Re: PWE - Penn West Petroleum
« Reply #1319 on: April 04, 2018, 05:22:51 PM »
At this point, things are so broken.  Shareholders broken, plans broken, egos broken, etc....   Going forward things do not look much prettier.   MGMT probably has already started to turn on each other and are likely very divided.  Furthermore if FF wins, they will gut MGMT. No matter who wins, shareholders will remain divided and sour.    Who wants to invest in this mess?

This company and its shareholders have gone through too much pain.  The right thing to do is end the pain.   Long term plans should go out the window.  Auction the entire company, or separate assets.  I do not care who does it.  Current MGMT or FF.   

No opinion on PWE but from a pure sentimental perspective, it reminded me of Burry's comment about when a bottom is formed. In 2003, he wrote (for housing) "after much pain both despair and disgust will settle in, and a bottom would begin to form."