Longview Oil Corp LGVWF

RE:RE:RE:RE:You have to think odds are a deal gets done

[Nawaralsaadi]

It is comical to read some of those deal values thrown around by the pro-SGY camp. It is as if LNV exists in a vacuum with no shareholders and no alternatives but to agreeing to whatever bid from SGY. LNV is not a company in distress, LNV owns valuable low decline oil weighted assets with sizable current production and a large future production potential. Shareholders at LNV are not going to bow down to Mr. Carbone and agree to whatever price he thinks makes sense to SGY.

SGY is a good potential partner for LNV, but if they don’t have the valuation metrics to acquire LNV at its true value then a combination with SGY is not necessarily in LNV’s shareholder’s best interest. A combination with SGY makes sense only if SGY is able, ready and prepared to pay a price for LNV that is reflective of the company true value and not a price that is hostage to SGY’s depressed valuation.

There is a very strong trend toward a dividend model in Canada and LNV’s assets are valuable to many of the operators active in this sector. Companies such as TOG, CJ and WCP among others can acquire LNV on very accretive basis all the way to $7 a share, thus I am not sure why LNV shareholders should settle for SGY in the $5s if that’s all what they are prepared to pay. Granted LNV’s lack of leadership is an issue, but this is a temporary problem; a smart man once described suicide as “a permanent solution to a temporary problem”. Longview doesn’t need to liquidate (permanent solution) on the cheap because it has a temporary problem (lack of CEO).

If I was in charge of LNV today, I would proceed with the liquidation of none-core assets, and use the proceeds to simultaneously reduce debt and buyback shares until LNV’s valuation is high enough to raise additional capital and use that capital to drill aggressively the company best assets, its light and heavy oil assets in Saskatchewan. LNV can shrink to grow, the late Mr. Drader failed to unlock LNV’s value, this doesn’t mean a better manager can’t.

Bottom line, I am ready to vote my shares (currently 3.8% of the outstanding shares) for an SGY deal if SGY is ready to pay a price close to where LNV traded in September, short of that I would be lobbying strongly to find another acquisition/merger partner as well as considering seriously the hiring of a competent CEO to unlock LNV’s value outside of any deal.

Regards,
Nawar