- The balance sheet of the company is flawless.
- The company has enough reserves for over 27 years of operations.
- The NPV of the future cash flow shows an upside of about 75%.
- OPEC nations need a substantial increase in the price of oil to balance their budget.
- The rise of oil production in Saudi Arabia is primarily to cope with the growing domestic oil demand.
- The slowing Chinese economy is the only bearish indicator in the growth of world oil demand.
- Athabasca Oil has substantial cost reductions to undertake on its way to profitability.
- The company paid over $13 per boe for G&A expenses in the first quarter.
- Cost cutting will still bring the G&A expenses at over $7.50 per boe in 2016 on average.
As you may know, I published an article on Seeking Alpha saying that I will sell half of my position in Pacific Rubiales Energy. Now, because of further evidence that the company is much more in trouble than I previously thought, I believe it is time for me to sell the other half of my position in the company.
While the offer made by Alfa and Harbour is fair in my opinion, I believe the offer has really no chance of succeeding. The recent stock movement also indicates that the market believes the offer has no chance of passing the vote.
Therefore, I believe bullish investors should sell their stock now before it is too late. I will publish a detailed article on Seeking Alpha in early July, after my vacations.
Remember when I called a sort-term pullback in the price of TransGlobe on April 24? It turned out well, but not for the good reasons.
The stock did break the C$5.40 mark. However, the stock experienced a strong pullback because of the 1Q earnings. Getting technical with stocks can be rewarding. In the end, my reading turned out to be right.
Expect the company to trade in the C$4.80 to C$5.30 range until the fundamentals of the oil market recover. Be patient, it is only a matter of time.
Disclosure: I am long TGL.
- Corridor’s natural gas business in New Brunswick will be profitable, despite the moratorium.
- The company has a pristine balance sheet, with no debt and over $23M in cash.
- It has a quick ratio of over 29, which indicates absolutely no financial pressure in the short term.
- The market is completely ignoring the tremendous Old Harry and Anticosti Island prospects.
- The net present value of the company is $4.95 per share.
- Alfa and Harbour are buying it a little over the fair price of the company.
- Don’t expect Alfa and Harbour to break the bank if the vote fails.
- Astonishing netback of $9 per barrel for a realized price of $47 per barrel.
- Strong balance sheet is perfect for future acquisitions to boost operations in Egypt.
- The oil lifting capabilities of the company will be very beneficial to shareholders.
- The model is realistic according to the first quarter results.
- The market fairly thinks that the offer presented will be rejected by shareholders.
- The current offer will be edged higher or the other group of investors will themselves present an offer.
- The price of natural gas will rise according to AECO futures.
- The company will break-even under current market conditions.
- The business model developed by the management team will thrive in the current environment.