Big Banc Split Corp T.BNK

TD Maintains Tender and $2.20 Target

[b2e2r2n2]

Bankers Petroleum Ltd. (BNK-T) C$2.07 Operational Results Overshadowed by Impending Deal Completion Shahin Amin; Soheil Sharifi (Associate) Event Yesterday before market open, Bankers Petroleum released a Q2/16 operational update. Impact: NEUTRAL We view the impact of the operational update as neutral, considering the corporate take-out process for the company by Geo-Jade for a cash consideration of C$2.20 per share. There is no new information on this process, but the company confirmed that the deal completion is subject to the approval by the Chinese State Administration of Foreign Exchange (SAFE). Bankers' management expects that this could be obtained in the coming weeks. In our opinion, the deal is more likely to close than not, and we are maintaining our TENDER rating and C$2.20 target price. However, in this note, we have also considered the scenario of the deal not closing and the possible impact on the share price. In this outcome, we would expect the share price to weaken significantly as the event-driven/arbitrage investors unwind their positions with the re-entry of fundamental investors lagging this flight of capital. However, in line with the share price performance of Bankers' closest peers in our coverage since the announcement of the Geo-Jade deal (March 20, 2016), we would expect the company's share price to eventually settle at around C$1.20 We have adjusted our valuation and estimates to account for this update. There is a slightly positive impact on our NAVPS estimates because of a better year-end net debt position. This is mainly due to better-than-expected gains (and a lower carried book value) from hedges in the quarter. TD Investment Conclusion Although the company is opportunity-rich with a substantial resource base in Albania and an excellent team, its growth prospects are limited by lower oil prices and funding constraints. The Geo-Jade offer presents an attractive exit opportunity for investors and we view the closing risks to be acceptable. Therefore, we are maintaining our C$2.20 target price and our TENDER rating.

[b2e2r2n2]

Interesting to note that TD expects share price to settle around the $1.20 mark if the deal doesn't close.

[ImFineThanks]

I call bullshEt in that. It was 1.2 right before the announcement and oil is way waaaaaay up since then. Bunch of crappp.

[staz]

"we would expect the company's share price to eventually settle at around C$1.20 ". $1.20? Sounds too dark. The deal was announced on March 20 when the oil price (WTI) was between $40-$42. Even with lower production of 15,023 due to higher prices of $29.99 in Q2 vs $21.07 and 17,000 in Q1 the revenue per day in Q2 was ~450K vs ~364K in Q1. Bigger inventory, more hedge by 1000bbl/d

[bmeister2]

I have been through a lot of ups and downs with this company and tend to think that we would be a lot closer to the TD number of $1.20 than the $2.20 offered by the Chinese company. So, I want this deal done as it is by far, the lesser of two low-ball scenarios.

[flintabattey]

....careful bmeister, last time I suggested a similar price collapse in such an eventuality, I took a tongue lashing from BC who suggested his due diligence and ownership of 260,000 shares allowed him to correctly foresee a price exactly where we are now....

[bmeister2]

Lol. Yeah,gotta be careful. I think the BC man has gotten a lot out and moved to greener pastures. Gte,for example.

[braincloud]

Na , I still have a bunch but have taken positions in CNE and GTE. I must admit though if there's a sell off in oil beyond the recent I will trade more out in favour of those