Regal Partners Ltd V.RPL

The Current Environment and RPL

[InvestorSuperfan]

As I mentioned in earlier posts, asset sales in the oil patch today are a buyer's market. I think it will be tough for RPL to find an entity willing to buy their "non-SE Sask assets" at fair value. It may even be difficult to find a buyer who is willing to pay all cash for the sale. Steven Sharpe (one of the new RPL Board members and one of three people on RPL's "special committee" who will make the decisions after the financial advisors present the alternatives / recommendations) is also the Chariman of Advantage Oil & Gas (Advantage does not pay a dividend). Advantage recently engaged in their own sale of assets to Questfire Energy "....of substantially all of Advantage's non-core assets" (the deal closed April 30, 2013). Advantage received 1) $40.2M cash. 2) A $32.6M Convertible Senior Secured Questfire Debenture. 3) 1.5M Class B Questfire shares. The net cash proceeds from the transaction was used to pay down Advatnage's debt. I guess all we can really gather from this is that Sharpe is a man who is willing to sell any and all assets that do not form the core of an O&G company's core operations, and hiswillingness to accept bonds/debentures/shares from the purchasing company in lieu of cash. Interesting to note that, in RPL's NR dated May 9, 2013 (in which they released their Q1 2013 results) RPL states "....the Company has the flexibility to adjust it's drilling program coming out of breakup through it's two core areas of southeast Saskatchewan and the Viking". Also, the same news realease stated RPL "Brought 22.0 gross (22.0 net) Viking wells onstream with a 100% success rate". Since RPL left the decisions they ultimately make open-ended, I suspect the Viking assets are currently on display for potential buyers to bid on even though RPL considers the Viking a "core" asset. Regardless of the decisons that are ultimately made, RPL's share price likely won't to make much of a move upward no matter what is sold / cut / eliminated (dividend, assets, etc.). I think RPL will remain a "show me" story after the decisions are implemented - I think the Street will want to see profitability and cash flow that more than cover any remaining dividend and near term capex, along with acceptable debt levels, before the share price appreciates considerably. Finally, don't rule out the possibility of a takeover offer recommended to the shareholders by the special committee - all options need to be examined. Perhaps the whole of all assets Renegade currently owns (including SE Sask) would fetch a good price from a mid-tier compnay (or even one of the big boys)  given the quality of the SE Sask assets combined with the other plays.......?