Energy Summary for June 8, 2017 (CJ part) Cardinal has fallen from over $5.75 in the last week alone, after announcing on June 1 that it plans to buy $330-million worth of assets in Alberta and Saskatchewan. The assets are producing 5,000 barrels of oil equivalent a day. Analysts generally see the assets as a good fit, but even so, investors seem displeased that Cardinal is conducting a $170-million bought deal to help pay for the assets. The bought deal is being done at $5.50 a share, representing an all-time low for the stock at the time of the announcement, and will boost Cardinal's share count to over 110 million from 79 million.
Cardinal has now filed the preliminary prospectus for the offering. The prospectus contained few details that were not already announced, but there are some interesting tidbits. For one thing, the prospectus confirms what was already widely suspected, namely that the seller of the assets is Apache. (Reuters had reported this shortly after the deal was announced.) The prospectus also helps to clarify just how little attention Apache had been paying to the assets. Cardinal had made vague reference in its press release to "minimal capital" being spent, but the prospectus shows that the assets, which are currently producing 5,000 barrels a day, were producing closer to 6,400 barrels a day in the first quarter of 2016. Cardinal will doubtless be looking to push the production back up once it closes the acquisition, which it expects to do on June 30. The financing is expected to close on June 21.