Athabasca Oil Corp T.ATH

Smart Move....Sets up next one!

[mrmomo]

Well my dear Athabasca Salsa Sauce frineds, it seems today is Two for Tuesday or a DoubleDiamond payout for me today 8). Not only did one of my other O&G get taken out but the recent "interesting" developlements in ATH just FULLY 100% confirmed what i've been saying for a year.  That ATH was in the process, and has been so for some time, of a "transformation". And this deal was Phase two. With this sale, Athabasca now sets up for a "potenital" & eventual sale of the whole company tp a much much bigger fish sometime next year, imho. It seems that "someone" at ATH HQ has been reading my posts on SH and finally had the smarts, wherewithal to inact them.

As i've been saying over the past year, there was only one way out for a company like ATH. Internal re-organization, fix the BS & debt levels, divest either thermal or conventional and then process to sell yourself. And it seems that the folks over at ATH preferred to keep the former and get rid of the latter. Setting up a potential sale of the company to someone like Meg, Cenovus or Suncor some time in the next 24 months. So by divesting nearly 50% of their conventional production near Kaybob, at more than great prices, their conventional output in that area is now negligible. I'm guessing, assuming, the remainder of those assets, about 2,5K boepd, will be sold at some point to someone before the whole company is sold off.

For me, more intrigiung than what the assets were sold at..... is WHO bought them? At first, prior to finding out that my investment in Pipestone was bought out today, i thought is was either Halo or Strath that was the purchaser of those assets. But since Strath is now merging/buying out Pipe, it cannot be them.....or could it? So it must be someone else. Halo maybe? Is about the only other private entity i can figure that would be interested or have synergies. I guess we'll find out soon, in due time. As for the assets, at ~54K per boepd, it's even better than what Spartan sold their assets just a few short months ago and sets a NEW stanard for what producing assets are worth in the area of Duvernay & Montney.

So what happens from this point forward? Assuming they put most of the proceeds of the sale towards their debt, ATH will be left with about ~$150M in critical liabilities or debt. Which is more or less peanuts for a company their size. It will leave the company with almost no long term debt or very little and about ~$120M in decomm. Perfect for an acquiring company to pounce on. The only question remaining here, would anyone be interested in paying a hefty premiunm to buyout ATH? At currentl levels with an $2,3B EV, that would imply a valuation of ~75K boepd, which is EXTREMELY rich ANY way you look at it. At $4, which would probably be the absolute minimum ATH insiders, holders would sell, that number goes up greatly. Who would be so inclined to buy any EP at those levels? I don't see it, but that doesn't mean it's not possible if an acquirer is desperate enough and the synergies are VERY strong. I guess s/h will just have to wait & see.....

So for now, smart move, well done by mgmt as they proceeded to do what was needed and what i've been saying all this time. Divest non core & set up sale. This news now FULLY explains the reaction in the stock price over the last few months, and WHY it was held so strong, this high. As this was probably in the works for some time. I personally would be a holdder here, as the upside is pretty much limited and there are much better opportunities abound in the market or this sector. But even though i'm not a holder, nor intend to be one in the foreseeable future, and was/am very critical of the company's valuation, this was nonetheless the RIGHT move forward for both the company & it's shareholders.

GLTA

[Dibah420]

Poms poms must have been on sale at Walmart this week. Basher conversions always a welcome sight.  Exorcisms are possible even in this age. Cheers.