Post by
InvestorSuperfan on Oct 19, 2013 7:11pm
Rock and a Hard Place
Let's take a moment to review:
RPL's former management team takes on way more debt than they can afford. A number of months pass by before the upper management team is gone. The individual given the interim CEO label does not appear to have any experience as the head of any energy company - rather, he appears to be a man who was simply given the "interim" CEO position for lack of any better alternative - no offense to him personally. The new Chariman of the Board, Thomas Budd, who also happens to be on the board of Sprott Toscana Energy Income Corporation "....has many years of experience providing mergers and acquisitions and financial advice on a significant number of Canada’s oil & gas transactions", according to the Sprott Toscana website.
So RPL has appointed a man as Board Chariman with a reputation of engaging in merger and aquisition deals, signalling that the company is leaning towards being sold. Meantime, the "Nominating Committee" is apparently searching for a new CEO and President, which would imply that the RPL Board is looking to go with developing the company's assets as a continuing, stand-alone, entity. What to make of all this? In my view, I suspect the preferred option is to sell or merge the company, and the interim CEO is just a placeholder so RPL can point to someone and say he is in charge while the RPL special committee tries to sell the company. Problem with a sale or merger - it's a buyers market - any oil and gas company with money to expand / invest has choices, and RPL's attractive assets have a significant level of outstanding debt attached to them which the buyer would factor in to the offer price (offer price + inheriting the debt + Exploriation and Development costs going forward = the money that would be involved in a takeover of the company). Thus, you have a company in RPL who on the one hand is likely trying to cut a sale or merger deal at a time when Western Canada oil and gas assets are not highly valued (even acquisition addict Cresdent Point Energy is apparently slowing down / stopping any futher activity due to the share dilution it's shareholders has experienced with all their equity issues in recent years as they gobbled up assets). Conversely, if the company cannot fetch a decent per share equivalent price in a sale or merger, RPL has President / CEO positions available under a Chairman who does not look like he's committed to keeping the company intact going forward. What experienced / successful individual would want to take a job as CEO or President of an oil company when it's Chairman is known for cutting sale or merger deals, and thus unlikely to support a long term plan for success as a stand-alone entity? Very messy indeed.