MEG Energy Corp T.MEG

Fair price for MEG-what is it???

[shambano1]

first remember this is a 6 month deal that is meant to take care of the high oil supply situation and bring oil demand/supply back into balance and that's all from what I understand.

secondly Saudis have successfully talked up the market all the while producing record amounts of oil for the past 6 months, and that says plenty.

sure they are going to cut production but they still have lots of oil in storage that will find a buyer, so they are also taking care of their oil storage situation at higher prices.

people that think oil is going back to 100 are delusional and unrealistic.

I would be very surprised to see oil above 60 for an extended period at some point in 2017 and it will come back down as USA frackers start to increase production and oil sands producers in Canada are also increasing production in 2017/18 with a few new projects coming online.

so what is a fair price for MEG, considering ;

1-they need cash of 150-200 million to increase production.

2-they still have huge long -term debt

3-they can make 100 -200 million in free cash flow in 2017 depending on oil prices but that is still insignificant compared to 5 billion in debt

4-they need to sell access pipeline to have cash available to repay maturing debt and this will increase costs by $3-$ 5 per barrel to ship.

5- the best option for MEG shareholders continues to be a buy-out by big oil or minimum a JV to expand oil sands processing and debottlenecking projects.

my fair price was 6-7 before the deal was signed and now I think a better fair price for MEG is 7-8.  on a takeover my target was 10-12 and is now 12-14 range, that all folks.

just my take on MEG DYODD