RE: Check out Fairborne's share price since its NR We can't be compared to Fairborne (FEL), FEL is 74% dry NG, and they had $300m in debt when they started their strategic process, so far FEL has sold its crown jewel oil assets, and they are still left with $150m in debt and even more dry NG production, and limited running room on their credit lines.
EQU is in a much different position, as you have indicated, we have alot of oil and NGLs (50%), and if the company was to divest the Canadian assets (value $80m to $100m) our debt will be cut to $57m at the mid point, with $45m maturing in March 2016, meaning most of our credit lines will be unwithdrawn. The Hunton and the Mississippian could be put in a trust, with drilling focused mainly at the Mississippian due to the high crude content, this could generate a dividend in excess of 50c and lead to a stock price in the $7-$8 range.
Separately, new source energy will be doing an IPO next week, they will be the first pure Hunton player to come public, If new source prices at $10 which is low end of range then their market cap will be $330m with $20m cash. So the market will be valuing new sources reserves at $310m or 148pct of atax pv-10, 94pct of pre-tax, 6$2,000 per boed, 8.4x ebitda, and $13 per boe. Based on these metrics, equal's hunton assets would be worth $383.3m.
The market is vastly undervaluing EQU, once this strategic pricess is over the stock will be priced much higher, even after the 10% run up friday, the stock is still dirt cheap.
Regards,
Nawar