MGM Energy Corp MGMCF

Peters and Co Trading

[OilEng]

I think the recent press release was misinterpreted as a negative.  To me the press release said that they have explored a Joint Venture and that selling the company is better way to maximize shareholder value.  Further that POU (as an owner of 13.9% of the shares) is putting the equivalent of a reserve bid on the auction.  In other words if no one wants to pay more than $0.20/share they will buy the rest of the company and keep it. 

I agree with management that an auction for the company is the best way to maximize the value.  A joint venture would have drilled a few wells and we would be waiting for 5 to 10 years for production.  Shell and boys can afford to wait that long, but MGM does not have that kind of staying power.  

So the best way to get the maximize value is to get an auction going between some wealthy oil companies.  I assume that this is what the management is doing.  Clay, James and Paramount have a conflict of interest as there is a lot of cross ownerhsip between POU and MGX.  However, the non-conflicted managment and directors have about 23 million options and 6 million shares.   They have no interest in seeing MGM being sold cheaply to POU. 

So I think I that if we could a fair auction going for MGM we could get a good percentage of the intinsic value of MGM.  The assets of MGM are not insignificant with almost 900 Bcf, 329 million in tax pools which are mostly CEE, $11 million in cash and about 5.5 billion barrels of OOIP.    The present market capitalization is less than $80 million based upon 389 million shares.  That is really cheap no matter what metrics you use.   I bought this company because I felt it was worth many times the present share price. 

Perhaps the auction has already started and we haven't noticed.  Peters and Co - who are big acquisition specialist in the oil and gas industry - started acquiring MGM shares on Monday, March 3rd and since then has spend $400,000 buying almost 2.2 million shares at an average cost of $0.18.  On Friday they bought 1.37 million shares with 286,000 shares at $0.20.  They have dominated trading by buying 83% of the shares since last Monday. 

They are not buying on behalf of POU or any other insider as there have been no Marker trades or insider reports filed.  So why is Peters buying?