As a VRO shareholder from inception, currently holding 155,000 shares , I have mixed feelings about the deal. On the negative side, they were forced to sell production at a very low price of $29mil/boe, in the lowest point of the cycle. As long term investors we were screwed having watched production go from 900 to 12,000 boe/d over the past 6 years and all we have to show of this is an proposed cash distribution of .30/sh. The production clock has been set back to 2006. I see that the proposed capex for 2012 is 30% higher than projected cash flow and dont like that in these difficult times, no matter how good the economics of the wells look. When will these guys learn? On the positive side, we are starting with a clean balance sheet, hedges in place for a change, and a credit line that will enable some pretty rapid growth, assuming their good drilling track record continues. With 2/3 of production being liquids, new VRO will be a more attractive take over candidate going forward as the industry continues to consolidate. Todays trading turned 12% of the o/s shares and most likely put a floor on the share price in the 2.50-2.60 range.The recent share price plummet has allowed me to reduce my average cost to below $4.00, and I believe we have a very good chance of getting there wiithin the next 12 months.
Lastly, I hope the BOD will re-align the new Vero cost structures to a smaller scale and will conduct themselves in a much more financially prudent manner in the future. As concerned shareholders we need to constantly remind them about that.