RE: RelaxTinmann...
Thanks for the feedback...As much as I think BUK is a good story, I seriously think managment is on glue with some of their recent decisions!
Durango reservoir originally drilled in the 60's producing 20+mmcf/day...We knew the resource was there..Managment figured it would produce north of 30 million with new technology...Deal done at 85 cent WITH 95 CENT FULL WARRANTS (2 for one shares really)!!! Talk about selling out for a song...This companies assets were gold to begin with, and as far as I'm concerned managments poor decisions are the only thing that can destroy it at this point.
Recent financing...$35 million raised+ 1/2 warrants...Royalty buy out is $4 million + shares...our share of the North Piper Well will be close to $5million (25% of costs)...Leaves quite a few $ on the table in my opinion...Remember we still have about $42 million that will be coming into the coffers down the road when the first set of warrants were issued. Perhaps managment should have included a forced excercize clause to at least get some access to some of that money sooner...These warrants get a 2 year free ride with no capital risk to whoever bought them.
I call Ed Davis today after the new to ask about the deal...He said that he expected bridge to cash flow about $20 million/month by november!! Thats $240 million/year!! or approx $1.60/ fully diluted share...We all know cashflow is king. Come novemeber we should have been trading at 2 times cashflow IMO..As Durango is not a long term asset. That puts us at $3.20/share.
Is diluting the company down 30% worth going after North Piper right away. (Yes, I know we have a window for a rig but still) No! Unless there is something else going on that we don't know about.
Having said that...It's easy to see why there is such a huge interest in the issue. It was underpriced! Its like asking a real-estate agent to set a price on your home and having 10 offers come in the first day fighting for the "gift". Think you'd feel you got hosed on the price? We've already taken the risk, punched the hole in Durango and found our cashflow...so why are we selling it for a song with record commodity prices? If this company is as good as we think it is why are we forced to issue warrants to sweeten the pot...Yes, the market can be tight for risky plays...BUK is not one of them.
I've loaded the boat with shares in this company , but just disappointed with the fact that our bluesky has gone to $hit..as we are sharing our potential windfall with another 50 million people...
Just my two bits...
T2