Yangarra Resources Ltd T.YGR

Kavern Transaction fits

[kavern23]

As stockhouse board is about speculation I am going to write a few posts on transaction fits for Yangarra. I don't own anything or plan to buy any stock until I see feb pass at min I am fairly unbiased.
First let's look at obsidian and Ygr fit.
Obe gain:
-quick scale for their cardium. If prop works for obe, the larger their cardium play unit becomes for obe the greater the stability of that unit paying a divy as a stand alone company.

-Obe could use Ygr as a potential option on if commodity prices rise and let Ygr production drop to 10k boe during low price periods in cycle.
-maybe the oilfield service unit of Ygr could lower Obe operating costs and reclamation cost.
-human talent...employees are always valuable.

Obe loss:
-not sure on culture fit if it works. I have no clue.
-increases debt in an ugly market sentiment wise.

I am just speculating and not saying this is possible.

But one current reality with 1.76 aeco prices...larger companies in cardium area, get better chance of a return of capital program working and not driving a company into further economic debt.

Even obe who is biggest need to be producing way more in cardium before thinking of a divy.

Being small isn't a great position

[kavern23]

Obe has quietly made themselves stronger to buy put someone if they wanted too...that's the big if. Obe increased their flexibility by buying back so many shares thus giving obe more ability too offer shares.  A 8.82 stock price for obe compared to  2.13 ipo 4.60 Bne  1.10 Ygr  be same thing versus private's like entrada. if all these companies continue to

[kavern23]

Ygr was 1.28-1.30 on Jan 1 range and 1.10 now. Bne was 5.20-5.30 on Jan 1 and 4.60 now ipo was 2.20 on Jan 1 and 2.13 now what price is the breaking point for these companies. I would say slot of Ipo shareholders get really cranky if under 1.60 ever, Bne probably under 4, and Ygr under 1 dollar.

[kavern23]

The other big reason I think obe will make a move on some cardium company is obe can solve one of biggest obstacles in a merger...what does one of the companies management teams do? Obe could offer the company management jobs of running cardium unit. If I was ever to make a prediction it would be obe uses these lower commodity prices to aggressively make pitches to cardium peers. That

[Hendrick3]

The problem with your thesis is every one of the targets has large inside holdings. Take over without a healthy premium would never be accepted. Remember insiders at ygr were just at the trough at $1.58. So possibly could be convinced at over $2 share equivalent but not below especially with job loss risk. Remember Bne from a couple of years ago. Doesn't matter if numbers make sense if

[kavern23]

Hendrick look at today...it continues.... IPO down to 2.05 or 3.76% down BNE down to 4.47 or 3 % down YGr 1.09. Obe is down like 1.5%.  Each day helps OBE in any type of exhcnage ratio. A deal should be more possibe in this enviroment....still very high interest rates in 2024...people thought USA would cut rates by March but another pipe dream. More greed in the market at 85 oil and 4

[margaritaman]

How is share price in and of itself the catalyst for the potential acquired to accept a low ball offer. There would have to be other factors in play. Pressure from the lending syndicate perhaps? 

[kavern23]

Yeah but big differene in accepting cash in an offer versus shares..."cash offers" chrystalize losses while share exchanges can wait it out. Lots depends on what oil prices do and settle at as that is only thing left to make profit on. The other BIG pressure for IPO, YGR, BNE etc...is what happens to production levels if they stop drilling?  THats the big problem All start

[margaritaman]

Acquired would presumably look at cash or exchange of shares in a similar manner when deciding if the offer provides for a fair valuation. 

[kavern23]

The whole patch in cardium needs to be looking at how realistic any type of return of capital strategies really are....continuing doing the status quo... Do these companies just keep spending capex to equal cf and years pass by.... To be blunt I dont think insiders of these companies have any type of leverage to hold out. Aeco could easily average in range of 1.25-1.75 the rest of the year. Do

[Hendrick3]

None of these companies are in financial distress. They can all pay down debt by shutting off capital for roughly a year. No financial institution is going to force repayment at such low debt to cash flow multiples. They like collecting interest as long as repayment is reasonably assured. If you talk o these management teams none of them thinks they are in trouble and need to do a deal. So a deal

[kavern23]

Hendrick at what stock price does it start to equal shareholder distress. These general annual meetings could get a lot more interesting as more shareholders may start participating and being more active. That is why I like obe right now, their management team is very informative and does a question and answer period. Although I won't buy obe as good as it is, think they drop more if I

[Hendrick3]

Shareholder distress is already there in all of these Cardium players even to an extent in OBE but that is not new in this segment. I remember in the darkest days of 2020 which was peak shareholder distress, the only effort to consolidate was the OBE/BNE bid which was ill advised and quickly fell apart. These small companies are very entrepreneurial and distinct in their culture which does not