RE: RE: RE: RE: Arcan't resources devulging statis "Since you now all about the crash from $6 why you still holding."
There is lots of value here at these prices and so I will wait it out.
CPG saw value at $5 a share. PBN sees value now, so much value that they are drilling wells on ARN's land at their own cost only to get 50% of the production. Don't you think the big boys that own 37% of the Company know a little bit more than the general public as tot eh true valeu of ARN?
ARN's major issue is their high debt load. That debt was incurred to spend money on infrastucture (Pieplines and waterflood) which will decrease costs of shipping oil (Pipeline vs trucks/trains) and waterflood will increase reserves and stabalize production. They've said from the begining that the waterflood will not be fully implemented until late 2012 to early 2013 - therefore results should be known shortly.
Take the infrastructure and also add in the value of ARN's $600mil in tax pools which would be worth over $1 a share alone (Would sheild $150m of income for a buyer of the Company), we can only guess how much the infrastruture is worth and I see value in ARN of $1.50-$ 2.00 alone in the pools and the infrastructure. Add in 2P reserves and the extensive land base and we're probably looking at a value of $6 per share minimum less the $3.25 per share in debt and you get to a value of somewhere around $3 on the low end.
Hence, I see value fo $3 and its trading at $1 so why wouldn' t continue to hold?
The risks I see are continued high decline rates which could reduce cashflow and put them in a tight spot given their debt level. If oil prices stay around $80 it will also severly impact their cashflow.
However, the PBN farm in deal gives them production essentially for free sicne PBN drills the wells and ARN pockets half of the production. They have so much land they could continue to do this if they get into a tighter spot than they are currently in.
In any case, this is far from a sure thing. But This risk of it going $0.50 as you say, does not outweigh the potential upside that could be realized here.
Their website has a good video on the process of waterflood.
https://www.arcanres.com/operations/waterflood-operations/