Attorney30
Giver, the nice problem with OPC shareholders (especially sub $2 shareholders) is that "when" bitumen production rises to 25,000 bpd and higher - its climbing every day - OPC will be taken out probably by July 2010.
The takeover party will never let the price rise to double digits - and will never let the production rise to the 50,000 bpd level either - before a bid. The logic behind this is the takeover party scoops up the reserves for less than other takeover comparables - due to the "ramp-up" discount - and gets a functioning 35% production interest in Long Lake by share acquisition, or possibly amalgamation plus assumed OPC debt. The buyer wants a cheap purchase -
The upside is that OPC will at that point be in play - and likely a counter-offer will be received. The next question is what is the takeout price, I think probably around $4-6 within the next 120 days, and I still I still put the likely takeover candidate(s) as NXY or possibly one of the large oil sands trusts. NXY may say it doesn't want OPC and its 35% interest, but I think they do.
A lot of candidates (and yes hedge funds) are waiting to see if production takes off ... that is why the April 29 Q1 update is so important ... I still think the production numbers will be in the 20,000 - 22,000 bpd range in April and if they are higher say 30,000 bpd (which I can't see), the take-over offer will come within 30 days of that update.
So, buying OPC at the $1.89 level is a very good bet ...
Posted by Attorney on the 3/16/2010 11:42:53 PM .