July 14 Bruce Hartman - SHN paid too much9:25am RoBTV
>>> Michael: Bruce Hartman portfolio manager at black rock capital is here to talk about the weeK. Thanks for joining uS. Let's talk about shiningbank paying a 22% premium for the folks over at find energy. As I look at the numbers it indicates to be 25, $26 a barrel is what they're paying for this acquisition. Is that a good price, in your mind?
>> We think it's a little higH. If you look at the flowing barrel of production, boe of production per day basis, it's anywhere from 57,000 to $90,000 of flowing barrel, which from our perspective seems to be extraordinarily high. The one saving grace, perhaps, is a lot of the properties that would be required continuous to existing shiningbank properties, it was a bit of a move after shiningbank cut after a he number of times. >> The find energy fields are primarily concentrated in a covina area, where they reduce costs.
>> Clive johnson: You can probably see some synergyistic costs in terms of fewer geo physicists, so on required. But it was an expensive proposition and somewhat diluted, too, as far as we can see. It's a share unit exchange rather than cash. It is somewhat diluted to shiningscomwrooverng where we in the environment where you can get a barrel at any price?
>> That seems to be the indication. A lot of the activity we've seen I'm not sure it's a great idea right now particularly with gas prices having been weak and likely to stay weak for some short period of time. So they're certainly paying up. I think to the extent there's oil involved in this acquisition today was probably, what, 12 or 15% oil. They're paying a lot for the oil properties, and a lot for gas propertieS. >> The fact this merger acquisition creates $1.9 billion company, is it this then put them on the radar screen for the major large cap companies as a potential acquisition of their own?
>> It's always a possibility. We haven't seen too many of those transactions yet, but I'm sure that if circumstances don't change as far as gas prices particularly go, then we're apt to see a lot more act pivot in that respect.