RE: PAI 13d SEC filing May 18thAgain considering the many options before SNG, it appears obvious Palo Alto is also amenable and supportive to a portion of asset sales, more likely the Western Canadian assets with additional longer term financing options to allow for the development of the Trinidad asset. We can see the trinidad block under this scenario may reasonably be left intact aided by a sale of SNG's producing assets, future financing secured allows for the merging with CHQ to retain the additional 25% and the funding to develop the full 70%. Long term this 70% would obviously yield a much, much higher valuation, and conceivably without stifling dilution. Adding SNG debt outstanding now being paid through this scenario still leaves them in excellent shape. Consider all debts paid with the asset sale, a merger with CHQ via share offering, leaving SNG with a nice chunk of cash on hand, 70% of Block 5c, with majority control, and a sizeable financing to develop the asset with BGI paying it's portion, we see a very attractive and viable long term investment emerging from CCAA with tremendous upside value.
This from PAI's perspective of course, but does illustrate the various options that favor SNG rising out of this at a far higher valuation via numerous attractive avenues. This also illustrates the far more sensible investment in SNG rather than the precarious CHQ coin flip gamble. SNG at these levels still heavily favors the upside in a risk/reward analysis. Conservatively a real valuation of SNG under most any of the many realistic options before it, would properly value SNG at a minimum of $3.00-$3.50 CDN. Simply figuring the 178m depressed value for WC, and the low ball known price for 25% of block 5c expanded to the full 45% at 155m, then adding worst case CHQ pays it's portion of debt, and SNG bank debt paid we have a worst case scenario of roughly $2.00 per share in cash and existing unvalued assets. That's worst case scenario, and highly unlikely. SNG all told is worth at minimum 300 million dollars with no debt paid and unvalued, and extremely undervalued assets. We've conservatively crunched the numbers and this value of $2.00-$3.00 per share is simply a low valuation starting point upon emergence from CCAA under virtually all likely scenarios. Beyond that it's up from their as things progress. A future sale of all or a portion of a more defined and developed asset only increases the valuation potential. Or simply developing the asset to production again only increases it's ultimate value.