Gear Energy Ltd T.GXE

The Best Defense is a Good Offense

[Quintessential1]

I wonder if the strategic initiative has considered acquiring rather then being acquired.  

It looks like RZE is floundering. 

Is there any chance of GXE picking up 50% more production for say 4x GXE's debt?
(mostly RZE's debt) 

If they could get them cheap enough it could be very accreative say $20,000 per BOE
(lower than the going rate but beggers can't be choosers right?)

GLTA

[tylerreddick]

Who is the ridiculous one now?

[Quintessential1]

Well I am guessing that you think its me for asking a question but I am pretty sure it's still you. GLTA

[Roscoe747]

That's a good point, Quint. The terms of reference for the SI indicate all options will be considered and an acquisition saves GXE insider jobs at the expense of the acquired jobs in a forced sale. GXE realises that it is too small and debt up to, say 1XCF is managable with increased CF from 8kbbl/d.

[scienceguy36]

Quick look at RZE 3rd quarter report shows they are in quite a pickle. Production of 3,787 boe\d with an operating netback of just $11.99. Debt aprox 55 million and ongoing dispute with gas operator shutting in approximately 1,110 boepd, including 626 bblpd of light oil and 387 bblpd of natural gas liquids since that report. As a comparison GXE 3 quarter report show production 5,511 with

[tylerreddick]

So much for the dumb idea of GXE buying that mess.

[Quintessential1]

Yeah that pickle is what makes them vulnerable and cheap.  Cheaper everyday it seems. 50% cheaper today alone...share price wise.   I looked at the Q3 report too and noticed YOY decreased debt and expenses. I also noticed that longterm debt is just over $500k and net debt is $55 M Could the net debt have something to due with the shut in inventory? On second look it might not be

[Roscoe747]

AIMCO owns 47% and backstopped the last bailout. Razor owns/ owned FutEra, a geothermal hybris power plant in Swan Hills and Blade, a dirtworks contractor in mid Ab. Razor is a mess but AIMCO could merge it with GXE, IF the deal was accretive, by removing the extraneous entities ( and the bagholders). On the surface Razor looks like a freeway pileup with miles of lawyer word salad trailing behind

[Roscoe747]

Just for the sake of discussion, I wonder what a deal with Razor would look like if only the o+g was offered to GXE with AIMCO supporting the arrangement and buying in? Or, a deal with RRL that provides 3700bbl/d and two conventional opportuunities at under $15k/fbbl. These are forced sales for debt only and may not be accretive but this is likely the type of business arrangement available to GXE

[Quintessential1]

It is all just for the sake of discussion...its not like anyone here sits on the board. If someone doesn't grab it bankruptcy looks inevitable so can GXE buy they assets they want on the cheap in receivership if they want any or would someone with deeper pockets be able to out bid them at that point?   Debt settlement: Razor settled all outstanding indebtedness owed to

[Roscoe747]

AFIK, AIMCO STILL OWNS 47% of Razor's shares. Razor had $500k in LTD but $127 mm in current debt before AIMCO took the FutEra deal. It still leaves Razor with $55 mm of current debt owed to suppliers, not banksters or other financiers. Razor also owns Blade, a dirt contractor, whom, if it works for Razor, raises all sorts of related party issues.

[Quintessential1]

Obviously GXE has options not least of which is stand pat and operate their business.  They have seemed to have repaired their cash flow issue and if oil prices stay at this level can probably hang on longer than most juniors and wait for opportunities to arise as others falter alongside them.  They should look at RRL and also RZE's assets if they can beat the other scavengers to

[tylerreddick]

" They have seemed to have repaired their cash flow issue " Quint, do you ever take a few minutes to actually read the monthly reports? It sure doesn't seem like it. Try it, you might be surprised what you learn.

[Roscoe747]

Why don't you try poropsing some original analysis rather than critical drive-by schmidtposts on the efforts of others, tyler. 

[Roscoe747]

A forced sale will leave the debt holders holding the bag as well as the share holders. It doesn't matter what Razor's metrics are if an accretive deal is approved by the court, or, more likely, the debt holders. The question arises whether Razor's woes are self inflicted, systemic or structural and whether any solution is accretive to the potential purchaser.