Why CGX share price is in the doldrumsFrom what we know to date, the Kawa-1 well cost upwards of $140mm, CGX is on the hook for their share, whatever that maybe. But for academic purposes we estimate $40,000,000. Say they monetize their shares to pay for this - 30 million shares to FEC. Affectively, FEC then will own close to or more than 90% of CGX's shares outstanding. We have more wells to drill, costing close to $80mm. We don't know at this point how much CGX will cough up, but let's say $20mm or another 15mm shares to be carried by FEC. Don't forget FEC is rolling in the $$$. They could be raking in $700mm plus this year, one times cash flow.
Looking to CGX's future, things are bleak, but what holds them together is the incestuous relationship they have with the government, this is the only reason FEC has not made their move yet, but they will. FEC could buy up the remaining shares on the market at a slow pace if they felt the need to do so. This will accomplish one thing, the share price of CGX would eventually disappear because of limited marketability of those remaining.
All comments welcome. Please don't take this as a basher. I am long FEC.