Eagle Energy Inc EGRGF

Blue Vs Yellow

[lenumero66]

I've quitely been following this board for a while and during the proxy fight. I felt like giving my 0.02.

In my opinion your choice should be dictated by one thing: future oil price.

If oil is going to recover to $70 in the next two years, the higher Eagles production the more the company will be worth. The interest cost and executive pay issues will just be noise, and while not ideal, the shares will be worth 10 times what they are today.

I have a little calculator sheet that I have been using and it has tracked reasonably well to the previous financial results. Take these numbers with a grain of salt but my prediction at todays production level and $70/bbl, eagle would net over 6M/quarter and have free cash flow at  around 7M/Q (allowing for 5M CAPEX per Q). Assigning a P/E of 10 that translates to a share price of around $6.50. (this assumes no active hedging). Even the most ardent blue supporter I think would happily take that. I know I would!

If however you are like me and think that the new reality is $50/bbl due to shale production (which just keeps going up), without hedges eagle barely scrapes by under their debt load, with essentially 0 net income. In this case I every dollar wasted on interest and executive pay is huge and kills our share value. If oil price isn't going to save our crappy balance sheet and bloated overhead, it needs to cut. Trim everything except the highest return assets, focus on one play, and maybe we can get the share price back to $1-2 and maybe pay some kind of minimal dividend. If you think low oil is here to stay, Blue looks like the clear choice.

So in summary I agree with current management, if oil price is coming back, we should get as many BBLs as we can, their is so much torque for Eagle share price as oil prices recover that we would be stupid to sell now in a depressed environement. HOWEVER, I don't believe this is a depressed environement, this is the new reality. I don't think the oil price is coming back. We need to get this company profitable in the new $50/bbl reality. I have seen many companies die (PRY) because manament was sure the price blip in 2014 was temporary. It's 2017 and there is still a huge surplus at Cushing. I think we are going to be in the same place this time next year.

I had a small position in Eagle before the oil price crash. I've been adding since late 2015 because (at the time) I was sure that oil would recover to $70-80 by 2017, and I would be making a good return plus dividend. Clearly I was wrong. I don't think oil is coming back and so I think we should go blue.

However this turns out I hope for good things for Eagle and that we can get this company back on track.

GLTA.


P.S. I have no basis for this, but I wanted to see what would happen to share price if we went blue AND oil price recovered.

Assumption:
-sell 2000bbl/day of production at $25k/bbl metric ($50M CAD). I think this is really conservative
-Refinance remaining $25M CAD at 5%
-Assume Royalties scale linearly with production and oil price
-Assume Opex/transport/depreciation reduce by 50%
-Reduce G&A to $750k/quarter
-2M/Q capex

Remaining production 1800bbl/day @ $70/bbl
Net income 3M/q, Free cash flow 3.7M
Implied share price $2.93

[whodathunkit]

When it comes to the price of oil, there is no such thing as a new reality.  Historically every time there has been a big price swing that is what is said.  A new price reality.  Inevitably the price swings again the other way.  Sooner or later the price of oil will rise.  It's not if, but when.  That is the million dollar question. By the way, good well thought

[ariesleaf]

For the better of EGL and the June 15, 2017 12:50 PMEDTVolume: 13,049 very low. Yellow or Blue everyone here should be buying more.( Average Down).

[Scottie99]

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[Jitu1011]

If we maintan little calm and optimistic view which Mr Gunderson and team is missing somehow, we will be able to see that there is a Coroporation which extended loan after due diligence and probably very much aware of G&A expenses, as well as Mr. Clark compensation and strategy.  Alos, there is Canadian big bank which has price target of $1 on EGL beside this. I won't rule out the

[Scottie99]

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[Jitu1011]

Thanks! I was unaware of Kingsway increasing its stake.  However regarding EIA and US Shale, I heard that it won't be possible for US Shale to survive the low sub $60 price and hence like we saw few shut downs last year; OPEC will be succesfull in getting rid of most of that comeptition by 2018.   I am not too sure about receivership claus and how fast or feasible is for

[Scottie99]

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[whodathunkit]

Didn't White Oak in the first month of the loan renegotiate some of the convenants?  So yes, they seem willing to work with Eagle and don't seem to be eager to pull the plug. Cheers.

[select555]

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[whodathunkit]

Putting your anger aside, there was no evidence presented by the blue side to justify nor dispute Clark's pay.  The reality is hind sight is a very clear view.  There are many factors and moving parts that drive share price.  I'm not suggesting that management couldn't have done something sooner to reduce costs but with no one complaining it would be human nature to keep

[select555]

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[whodathunkit]

The reality is no one knows what any of them will do.  To me it is fear of the unknown and taking a worst case scenerio that is driving a lot of the vote Blue logic.  Businesses are not in the habit of willingly taking a loss.  The lenders will act in their best interests and that will include changing the loan provisions if necessary to get back more of their money than bankruptcy,

[whodathunkit]

I don't think anything related to that because that is pure speculation.  What I do know is what ISS recommended and the reasons why they recommended it.  That is what makes sense to me.  I find it interesting that the main argument against the current management seems to be what their ulterior motives might be and that the concerned shareholders have no ulterior motive. 

[yieldguy]

My 60,000 shares are going BLUE!  Mr. Gundersen has over 500,000 shares, so the man is/has put his money where his mouth is! It doesn't make sense for Mr. Gundersen NOT to act in the best interests of shareholders.....because the OWNS 500,000 shares! He also told me that he may not even take ANY salary or compensation! Has Clark ever said he would be willing to EVEN reduce his

[whodathunkit]

The current board owns over 700,000 shares.  So by your logic they will act in the best interests of shareholders as well.  Yet you say they aren't, so, you can't say Mr. Gundersen will just because he owns 500,000 shares.  You can't have it both ways. Cheers.

[yieldguy]

WHO......If the current board had faith in Clark and the direction of the company, they would be buying shares left and right. They are not. Gundersen is one man with over 500,000 shares.  The 700,000 shares you refer to is a total for what....5 board members?  So, that would be an average of say....140,00 shares each.  Not a really impressive number given the share price. 

[ariesleaf]

Question, How did He get his shares.?    Gundersen is one man with over 500,000 shares.

[whodathunkit]

Clark has roughly 500,000 shares, the rest share the rest. You can't speak on behalf of the board as to why they will or won't buy additional shares.  You don't know their financial situation and where they have investments outside of Eagle.  Having faith in the company or not isn't the only deciding factor.  And considering the current uncertain situation, why risk