RE:RE:RE:RE:RE:RE:Take underThere was no mention of a dividend in the news release so I am assuming that there will not be a dividend. At least not initially. Excess cash flow should be used to pay down the $2.9 billion of debt. I think all of the details about this offer have already been released.
All we have so far are opinions that this is a fair deal for PIPE shareholders. You can either trust their opinions or you can sell your PIPE shares. There is no way for an individual investor to know if this deal is good or bad until Strathcona starts trading.
BMO Capital Markets has provided an oral opinion to the Special Committee, and Raymond James has provided an oral opinion to the Board of Directors of Pipestone that, in each case, as of the date thereof and subject to the stated assumptions, limitations and qualifications, the consideration to be received by the shareholders of Pipestone pursuant to the Transaction is fair, from a financial point of view, to the shareholders of Pipestone.
MEG is trading today at over $24/share. Compared to MEG, Strathcona (SRL) will have similar heavy oil production. Half of SRL's heavy oil comes from Cold Lake which is lighter so it sells at a premium. MEG has 285 M shares outstanding. SRL will only have 214 M shares outstanding. SRL also has 75,000 boe/d of nat gas and condensate that MEG does not have. I see plenty of upside. SRL could start trading well beyond $30/share if the price of oil remains strong in Q3.
Eric Nuttal loves heavy oil and long life reserves. This fall Eric will be pumping SRL just as much as he pumps MEG, ATH and BTE. Eric says heavy oil is where investors need to be and that is where PIPE is heading.