High Arctic Energy Services Inc T.HWO

Valuation

[Stonksonlyup90]

Anyone care to venture a guess as to where the stock price will trade in the coming months?

For shareholders that elect NOT to participate in PNG co, at a minimum they would receive:
• $0.75/share as a Return of Capital, plus
• Cash proceeds raised on sale/spin off of PNG co

Considering PNG co is currently doing about $54M/year in revenue and $15M per year in Operating Income - with ONLY ONE RIG drilling, what would a valuation attempt of this business look like with the potential of 4 rigs drilling? You'd also have to consider any income generated from equipment/tool rentals, camps, manpower services etc.

Even if we say only 3 rigs drilling the future - that's operating income of $45M per year. Put a 4x (conservative multiple) on that and you get $180M. Divide that by fully diluted shares outstanding of 51M shares and you get $3.52/share.

Now let's say you only get 75% of shareholders exercising right to purchase at that price. Cash proceeds raised by remainco would be $2.64

• $0.75 RoC, plus
• $2.64 Cash proceeds on sale of PNG co

= $3.39/share (this ignores any value ascribed to RemainCo operations).

*** I simply don't see how the share price can continue to trade at 40% of the value

[jmurraykli]

This post has been removed in accordance with Community Policy

[Northforce13]

Try valuing it with non rose colored glasses, and if they don't have any additional rigs go under contract.  Then what do your numbers look like?  Less pie in the sky?  Lets go further and say some years down the road their only rig under contract is no longer under contract.  How do your numbers look then? Sure, you can live in lala land and pretend this is worth 3.39 per