GREY:LSTMF - Post by User
Post by
JohnDDon Sep 01, 2013 5:33pm
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Post# 21712551
TOL
TOL
Although I am in agreement that the debt reduction should be a top priority, I assume the reason they originally purchased the TOL shares was to provide the company with leverage to gain access to some of TOL's lochend cardium reserves. I think they should follow through with that plan and turn the value of those shares into a revenue stream - if they can make a deal that makes sense..
Given the location of the assets, I assume there would be some synergies to be had. As a result, the incremental operating costs would be minimal and the incremental netback per BOE would be higher than their average. If they could use their 17% shares and maybe even negotiate a land swap with the potential buyer (if there even is one,) it would be nice if they could come away with an additional 1,000 boe/ or more.
Alternatively it could very well be that LTS is the lead buyer and the reason it's taking so long is they need time to line up some buyers for the assets LTS does not want such as the Pouce Coupe gas assets. TOL produces 38% gas, and those gas reserves do not align with LTS's game plan. Under that scenario they may have to cough up some cash and that may explain why they sold some non core assets recently for $38 million.
If it turns out they "just" end up with some cash to pay down debt I would be happy with that too.
The worst case scenario is the deal falls through and LTS is stuck holding these shares on the books that are not producing any income and adding to the debt.
We should know soon enough.
John