IKM's 150% premium, implications for CKE and Aitken Creek Pieridae Energy (PEA) pays C$0.86 for IKM.
Ikkuma (IKM) was hovering at around C$0.33 for months.
However, the value was there and IKM was a grossly undervalued natural gas weighted stock although it had zero Montney exposure.
So today's IKM deal with Pieridae shows that a takeover premium can be 150%, if the value is there.
CKE's NAV per share on a 1P basis (proved reserves basis) is C$0.52 per share, according to the latest reserve report of December 2017. Meanwhile, the value for CKE's Aitken Creek pipeline (55 km) has been rising since December 2017.
According to the latest MD&A on Sedar, Chinook (CKE) received the first revenue (toll revenue) from this midstream asset in late 2017 and generated more toll revenue from this midstream asset in the first half of 2018 compared to the first half of 2017:
" We started reporting new toll revenue in June 2017 from our 12” Aitken Creek pipeline which is directly connected to the Alliance Pipeline. This resulted in higher processing and gathering revenues during the current reporting periods compared to the same periods of 2017. This pipeline also passes through our Birley, Martin Creek and Black Conroy lands and provides us with optionality upon the future development of a gas plant to flow directly to the Alliance Pipeline with access to Chicago markets, BC Station 2 via Enbridge’s T-North pipeline or connect to TCPL’s North Montney expansion when completed in 2019 or 2020. "
It goes without saying that its value will continue to rise thanks to the completion of the North Montney project in 2019.
This midstream asset was idle (it was on care and maintenance until early 2017), so it had little value back then, according to the Q1 and Q2 2017 reports.