The Takeaway Paragraph from Value Digger's latest articleValue Digger's latest article about CKE is locked now. It's free only for the first 10 days after publication, so I quote below the Takeaway paragraph from his article:
Takeaway
We believe that the buyouts in the Canadian energy patch are going to accelerate in 2019. And it seems that CKE could announce a buyout offer at any time, according to its Q2 2018 report linked above:
"We also believe that consolidation within our industry is required and would increase efficiencies amongst producers and streamline operations. We will continue to pursue opportunities that have the potential to generate additional value for our shareholders."
Based on the key metrics of the most recent major Montney deals, CKE's Enterprise Value on a potential buyout should be at least C$110 million, which translates into C$0.50 per share (Toronto), based on C$0.5 million net debt (Dec 2018), according to the latest guidance.
This figure is also supported by the fact that the company's NAV per share on a 1P basis is C$0.52 per share (Toronto).
Of course, all the Montney assets are not created equal. However, CKE's current Enterprise Value is less than C$50 million, so we are firm believers that CKE at the current price of C$0.22 per share (Toronto) has hit rock bottom valuation, given also that the value for the company's Aitken Creek pipeline has been slowly rising since mid-2017 and will rise a lot further in 2019, upon completion of the North Montney project.
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