Eagle Energy Inc T.EGL.UN

RE:the unfortunate part

[JohnnyLingo]

Completely bang on.  In a market that still has good near to medium term prospects, somewhere between $500K and $1M worth of EGL shares would have traded after a press release like this one, and the price would have jumped by a lot more than 11% (given how fast and far EGL's share price had fallen recently).  This was barely 10% - 20% of that, confirming that the patient is indeed on life support.

Don't get me wrong -- EGL is by far the best managed of the 2nd generation of royalty trusts as evidenced by its well-timed sale of its Texas properties in 2014 and its prudent stewardship of its balance sheet.  Its purchase of Dixonville wasn't as wise as simply sitting on the cash it got from that sale, but Dixonville is a long-life, low sustaining capital, very low decline asset and there are simply very, very few of those out there, so in my mind it was the most defensive (and therefore defensible) type of acquisition EGL could make at the time.  But the fact remains that EGL is a small, price-taking producer and will have to be extremely good manager of its balance sheet for a long time yet if it's going to survive.  I hope it can and will trade in and out of sharp distortions (as I did this week buying 20K at 0.53 after the sharp drop and selling yesterday at 0.60 for a small gain), but even at this price EGL is far from a no brainer, buy-and-hold-for-inevitable-better-days stock.  JL