a buyout is the best for this stockbeing new here, I will post what I found from a couple days DD after seeing the compoany say they are a target. Correct my errors please and feel free to dispute my opinion. So here goes.
The company ceo and cfo have indeed raped the shareholders over time in my opinion. I go back to the early days of the GOR. The company had under 60 million shares out, it appears they then gave themselves a sweet share purchase cash raise when in fact it was not needed with about $3 mill a qtr coming in from the GOR. so in fact they loaded up on cheap shares at pennies each when they knew cash was to come in and therefore the cash raise from these execs was not needed. It appears a scheme the two did to enrich themselves at sharehiolders expense. Just thinkwhat this shares are worth with half the shares they currently have! Next they did a deal with Reva, in factthe same two execs plotted a deal to buy a useless and maybe worthless land package in BC for a lot of shares... the shares went to the same two execs and what NWX got was some gold-copper deposit that has since been written down and never really exploited so we assume it is pretty poor but the ceo and cfo made out with another big amount of shares in NWX again a rotten deal for shareholders of NWX On top of that these two execs have given themselves warrants and options so the ceo now owns about 20 million shares! There is more even... they pay themsilves and cost the company about $300K per qtr to run this shell on a company that simply owns some lousy gold deposit and cashs cheques for its GOR.
Am I close to seeing what this really is???
So they use the GOR to pay out a dividend of on average a nickle a year, but it should be over a dime if not for all the dilution. But it could be worth another Million a year in a company that has operations and take out the wastefull G&A and fat salaries of these two execs who for all we know are only good at depositing cheques and thinking about a way to maybe give them a bigger chuink of the GOR.
So, I think a buyout from maybe Beach Energy would be best. Beach would fire these two execs, take out the massve G&A expenses and that would mean this GOR would add about $10 mill a year to Beach's rev's and they could maybe shelter some of taxes NWX pays cause Beach actually is an operating company that drills a hundred wellsa year. That $10 mill would then flow right to the bottom line for Beach. At no cost Beach would in fact book as revenue the entire amount of this GOR they pay to NWX, and have for years. Ten mill is not a lot for Beach, but hell it is better for them to book it than pay it out.
Now, the question is what it this GOR worth and what would a buyout bring?
Lately the GOR has paid about $2-$3 mill a qtr... less at $40 oil... more above $60... wti, but thy deal in Brent... so adjust for that... today at $55 wti... $60+ Brent... the GOR pays about $2.5 Mill a qtr or $10 mill a year... so to add $10 mill to the bottom line for Beach would be worth maybe a 5 times factor maybe $50 mill in total to give them a decent return on their cash. That alone is 50 cents a share... Before tax.. so redeuce it by the tax rate Beach would pay so maybe $15 mill of that so $35 mill after tax, however Beach knows they have the ability to reduce that amount thru work credits... I don't know. Even at $35 mill as a base amount you would then add about $10 mill for the cash on hand at NWX of over $7 mill plus this qtrs due amount as a receivable. Now we are at about $45 mill or 45 cents a share... this is ballpark... Beach can come in with a 45 cents a share bid.. they could add based on the ultimate value given upon a review by the auditors.
I think Beach could pay more.. they are ramping up drilling on the permits a lot... the biggest oil field at Bauer has out performed from day one according to all Beach reports... they are getting out more through horizontal drilling into not only this Namur oil horizon but also two other oil charged horizons called Berkly and McKinly formations ( if a rememer correctly from NWX and Beachpress releases)
All this comes down to this, shareholders do best if someone buys the company out from these two execs. Now the GOR only buy makes zero sense. What these two execs would want is a cash out. If they sell just the GOR the cash remains in the company and it is drained out thru G&A and about 30% of this would be from holdings of the two execs. why would they want to continue a company? They would be better off cashing out.
So, the buyout by Beach is best. Another royalty company would also enjoy much the same benefits and NWX shareholders should get about 45-50 cents a share imo that is nice upside from 30 cents today. so I will buy Monday.
long winded alright, comments appreciated and corrections appreciated, maybe I got it wrong and maybe I should not buy Monday.. I would love any response, before I push the buy button Monday. I know about enough about investing to get me in trouble so please correct my mistakes and maybe explain what I might be missing... it sure looks like a buy cause a hostile buyout is very probable given what NWX said in that latest presser.