Post by
JackDeeValentin on Jun 16, 2016 11:49am
Problem is
Although undervalued they've outlined a recent strategy that is quite similar to CKE and CQE. Let declines take hold, no clear committment to run the business and maintain. Realize there is more gas in the prior two names but RMP has become much more of a natural gas company and CKE and CQE have better balance sheets.
Although RMP is one of the worst performers in the sector it would have to fall 30%-40% further to have a similar valuation as CKE and CQE on a reserve and production basis.
Maybe this works out from here over the long term and maybe it does not. But the counterinvestor strategy is what it is. More acreage, infrastructure and we'll see. RMP had all of 2015 to exit at a valuation they may never see or get close to. The equity issuance and recent committment to a counterinvestor strategy was the straw that broke the back of many long term supporters. "Really, more infrastructure? a signficant equity issuance? to buy acreage? Don't you have enough Gold Creek acreage and undrilled locations at Waskahigan and Ante Creek or have you lost confidence in legacy acreage and not sure what is going to work in Gold Creek so buy everything available? Afraid of a low takeover bid? (this was more in 2015 when shares were much higher)
So CKE/CQE model it is and without a doubt John does not know what has happened to others b/c to him RMP is always "undervalued".
Summary of why investors have become lost all interest in RMP and particularly John. Most of this just comes from many conversations with investors and sellside.
In summary RMP's strategy since the initial strong results from several core Ante Creek wells (several years ago) has been questionable without any communication as to why execution, falling oil production, higher declines, lack of meaningful reserve additions, gas to oil ratios ramping, wasting a fair amount of investor cash flow on infrastructure projects, pushing back on strategic opportunities b/c they thought "their stock very undervalued at $4, $3, $2" but felt like it was "so undervalued" they do a meaningful share offering to repeat a strategy in Gold Creek (including lot's of money for infrastructure) and very little in terms of wells.
They have no access to reasonably priced capital now and should only be considering strategic opportunities (not just a sale but also partner who would take wellbore/working interests to fund development among other structures available to E&P companies with economic assets but no liquidity or reasonably priced capital).
Comment by
subha7777 on Jun 16, 2016 7:32pm
NO hurry to add RMP, it is falling by $0.04 to 0.08 each day, and in another few days, it will fall down below $0.75