RE:RE:RE:RE:RE:RE:Share buybacksI'd be shocked if Chinese or Russians would be interested or permitted to bid for anything in Canada for the foreseeable future. Private money, or private equity money, don't place much value on ESG screening/screaching. They are more interested in buying assets for pennies on the dollar than anything. A much bigger company like SU or CNQ can bury it on their balance sheet and claim their plan is to improve all aspects of the acquired assets including financial and ESG. But you never know , maybe or PM spent time on a private island somewhere warm with any number of unsavory types.
filefish wrote: I should have said, recognition of Hangingstone value rather than "write up". Yes the value is well known to the market and easy enough for a prospective buyer to submit a bid premium. If it were to come from another Oil sands company or from a chinese or russian owned oil company the ESG hurdle may not be so high.
Maxmoe wrote: And keep in mind it isn't really a "write up" in asset values. It's a reversal of the previous write off . In my view the big hurdle for a bidder isn't how big the premium will be to shareholders. There is plenty of room for it to be very substantial to entice us. The hurdle will be for the buyers to convince their board, bankers, and shareholders that the bargain valuation is worth the pita of dealing with the ESG nutbars. So, the bigger the discount to the asset value, the easier that hurdle is to get over.
filefish wrote: The point you make about the reluctance to book an impairment reversal is quite valid. When I questioned the CFO about this a few months ago he said they would normally make an assessment at year end. However I have noted that many of their peers have already done so in the 3rd quarter . Hangingstone is currently valued a $0 the books. A subsequent write up of Hangingstone's asset value + larger, derisked FCF generated from the 2022 WCS hedges + $250mil+ excess cash and growing on the books + billions of tax pools are certainly a recipe for a takeover bid, and in my opinion, it will come soon.
Maxmoe wrote: I paid 11 end of October 2020. It's doubled to 22,44,88 and I expect at least another double. Bashers gonna bash, I've heard it all the way up. Penny flippers, day traders, bash and buy guys will be back. Nobody will short now, they've been burned. The risk I see to another double is an opportunistic buyout. Friendly or not, this company can be bought at well under $2. Lend me the money, I'd buy it all. That's a big reason mgmt wont buyback stock or use the big cash hoard to pay off debt. It makes it easier to buy them with a hostile bid. A buyer that doesn't care about ESG nutbars or lenders (like all our big banks in Canada) can scoop these assets for a fraction of what it would cost to replicate or what has been invested, at valuations much lower than other energy assets.
Mgmt is also dragging their feet on reversing the huge reserve write offs that will create a huge increase in book value and a huge one time reported earnings for the same reason. Fear of a hostile bid. Definition of a hostile bid is ANY bid, regardless of price, that results in them being out of a job without a huge golden parachute. For now, management is aligned with shareholders interest because they won't sell. I would expand your comment about the "fools in Toronto " far beyond that little island of ESG deniers. Add in most of Europe, BC, Quebec, and even large swaths of New York and the rest of the USA. How about the idiots that sold 20% of the company at 18 cents a year ago? They should be fired. Energy producers, and oil sands in particular may never be "hot" but the coming oil shortage will make them tolerable or at least "ok", So good luck to all in the new year.
Renofund wrote: Rational43 wrote: An oilsands company can be printing money, obliterating debt and adding net cash to the balance sheet, and it doesn't matter, if the fools in Toronto don't want to pay attention. The stock price can stay lower longer than anyone would think.
That's why aggressive share buybacks are the answer with surplus cash.
Share buybacks take advantage of market apathy, to buyback proven reserves, production, earnings and cash flow at a discount to market value with zero integration risk.
The two scenarios have exactly the same increase in value per share:
1. Increase production 33%
2. Buyback 25% of shares
In both cases the CFPS, EPS, and NAVPS increase for holders by 33%. No Capex is required, and no additional operating costs associated with the increased "production".
Athabasca could easily hold production flat and buyback 25% of shares next year, while still repaying debt.
I think some folks forget that ATH was .17 at one point over the past 52 weeks. Looking at roughly a 700% return. Many other names up multiples of 100%s. Names will stall here and there. Flows into energy names have been strong and will continue. Perspective.