Birchcliff Energy Ltd T.BIR

Outlook for the Birch.....

[mrmomo]

Looking very dismal & bleak, after the StrathCona & Tourmaline acquisitions. Especially for the long term s/h of the company. If there's was ONE out/exit for Birch for the "unfortunate" financial situation they find themselves in, it was a possible "lucrative" buyout from a larger entity with deep pockets. But after the announcements from StrathCona & Tourmaline on WHAT they are willing to offer these smaller players, THAT option seems to be a bad one as well. Because the going rate and what these guys are offering seems on the VERY low end of the spectrum. And that's a VERY bad sign for both Birch & its holders.

You see, at this point Birch has a BIG problem. Being an unhedged heavily weighted NG producer is a double whammy in this dreadful environment. Especially one that NG prices aren't sufficient for it to be a viable entity for the longer term AND one that's paying out an unsustainable, way too generous dividend. And has to literally BORROW money from lenders for it to keep & pay out that little privileged item. So if their business is not sustainable (unless things drastically change!), then there's only ONE other option and that's an exit strategy for mgmt and it's major holders. And that usually entails selling out to a larger entity. So is this Birch's ultimate fate?

Well, before you start jumping up & down on the possbility of Birch being acquired and the monetary windfall youll get, first take note of these important facts. Most of the bigger players save for a few of them, already made their moves. What is left is Canadian UnNatural, Arc & Whitecap as possible suitors or some type of merger with an equal. Imho, you can pretty rule out Whitecap as i seriously doubt they want to acquire a heavily unhedged NG producer such as Birch. I think WC is more geared towards wanting to purchase a more balanced producer than one overall weighted in NG. Therefore you have Canadian UnNatural & Arc......and imho you better hope it's Arc lol.

Because if CNQ has its sights on you, get on your knees & pray to Jesus right now lol. Because if you thought the Pipestone & Bonavista acquisitions were total "you know what" deals & bogus, then just wait until what CNQ offers you!!! You'll be up in arms ready to revolt like they did in France during the French revolution lol. At the metrics that both Pipestone & Bonavista got, you're looking at below $30k boepd which implies a value of <$2,4B!!!. And when you include the significant debt Birch has, that number is even lower. At THAT level, you'll be getting less than $9 per share or anywhere from $7 to $9 depending how unscrupulous & difficult the acquirer will be with the small details like debt.

Any other alternative? Just one, but you may not like it either. And that's a merger of equals with another similar ep. Problem here is that Birch is NOT on stable ground nor does it have the advantage in bargaining to get the upper hand in such a deal. So "merger of equals" might not really NOT be what you think  OR that EQUAL for Birch s/h.

I'm not sure which way Birch mgmt/bod will take the company right now, but one thing is FOR SURE, they need to take some drastic measures NOW if they are to survive this low pricing NG environment for any length of time. Which may mean cutting  the divvy entirely AND reducing Capex significantly. Of which the latter has critical implications for the longer term if done so for an extended long period.

So be carefull here folks, because Canadian UnNatural is on the prowl and they're looking for a cheap meal to swallow............!


GLTA

[PlutusofCrete]

Wow.

[PlutusofCrete]

BIR is the leader of ROCKIES LNG and working with Ksi Lisims LNG.  Why the hate? Look how far the company has come over the last ten years.  I don't think all this hate is warranted. I like my .20 cent divy (.80 annual). Keep it coming. 

[iwpete]

Got my div from ARX today, looked around and the best deal was still BIR.  So that's what I bought.  Looking forward to the special div from TOU on the 1st Nov and will see what to buy with that. GLTA

[nhellofaguy]

Hey Mr Momo, Your outlook for Birch is overly pessimistic.  First unhedged vs hedged, its always a gamble.  Being unhedged last year, enabled BIR to pay down a big chunk of their debt.  Having said that, I think they were premature on their dividend increase.  Perhaps 0.10 per quarter would have been a better choice, all water under the bridge.  In Q2, they only increased

[mrmomo]

I'll bite & respond to your reply Mr. Nhellofaguy, as you "seem" like an honest imvestor willing to discuss this in the "proper" way without shouting insults or branding me as a blantant basher. So i will respond in-kind to your comments. nhellofaguy wrote: "Your outlook for Birch is overly pessimistic." Yes it is, no doubt about THAT and it is justified

[Oldnagger]

When companies get desperate , they tend not to buyback their own shares, nor do insiders. Furthermore they usually do not acquire sizeable additional lands nor spend money drilling non completed wells in order to meet drilling requirements on the land. Rather , I am sure that Birchcliff s management has faith that nat gas prices will rise again. With more than 25% of US gas rigs shut in and

[nhellofaguy]

Good Evening Mr Momo, Thank you for the rebuttal.  I appreciate your opinions and I consider all information in my investments, those of the analysts, that in the news services, message boards, company presentations, financial statements as well as the markets. In terms of the increase in debt level, and projection for debt at end of year, I base it on conservative NG price forecast as well