PWE - Penn West Petroleum

[Joe689]

OBE tender offer for BNE expires Monday

 

PRs have been amazingly quiet. Mouse silent. And OBE has a bank redetermination due 3/31 and year end still not out despite their last tender extension stating to allow BNE shareholders to apple-apple the reports.

 

This name has been a high flyer as of late. Probably something coming but what do I know

 

Stocks are near par for the exchange offer

 

[SharperDingaan]

The silence is speaking volumes.

Market activity suggests that all of it is good.

 

Not surprised as there is a lot of reporting, bank line extension, cap-ex planning, refinancing, etc. contingent upon how the tender goes. Most would expect that a release of Q4/2020 results prior to the tender's close, is contingent upon a minimum volume advising that they are going to tender into the offer. No one can afford accusations of trading on 'inside' information.

 

Don't think they will get 100%, and if so - the less dilution for OBE.

Suspect there are other things in play as well, and that it is getting near impossible to keep it behind the curtain.

 

We live in interesting times.

 

SD

 

 

 

[Liberty]

Only down 89% from peak now.

[SharperDingaan]

Only down 89% from peak now.

 

Yet up 2.4x since 12/31/2021, and 5.02x within the last 6 months.

You have something against multi-bagger returns  :)

 

SD

[SharperDingaan]

https://www.obsidianenergy.com/press-releases/obsidian-energy-announces-the-extension-to-syndicated-credit-facility-and-senior-notes/

 

The full import of this announcement, cannot be understated.

Absent the announcement, the Q42021 quarterly would have to have included a 'going concern' note disclosure; as 65M+ of notes would be coming due within 7-8 months, and there is no obvious route to repaying/refinancing as the notes came due. The 'going concern' disclosure would prevent the vast majority of institutional shareholders from tendering into the bid, even if the resultant combination would be highly advantageous.

 

Now it is a new ball-game, the two companies are on equal footing, and the terms can speak for themselves.

All else equal, the bid closes end-of-day Monday.

 

May we all do well. 

 

SD

 

[Liberty]

Only down 89% from peak now.

Yet up 2.4x since 12/31/2021, and 5.02x within the last 6 months.
You have something against multi-bagger returns  :)

SD

I prefer my multi-bagger returns to occur without a 98% drop first.

[Gregmal]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

[Joe689]

ER released this morning, morning of tender expiration.

Although somewhat aggressive pricing assumptions (but then again currently in the money)  they partially guide 2022 having 100m FCF while keeping production flat.  That is on a 150 market cap.

Legal costs are finally over with a settlement as well.  Great IP on new wells

This company has turned the corner.  That was a long turn.  I am up handsomely. 

[roundball100]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

Let's be fair here - I applaud Liberty for keeping track of things.  There has been blatant cheer-leading on this stock by some individuals, who have essentially claimed that it is on the verge of breakout, as it lost almost 100% of its value, shares consolidated 7-into-1 and then price dropping further per-share well below pre-consolidation, etc.  I see Liberty's comment as an attempt to keep others honest.

[Joe689]

The question I have is where OBE should want this deal anymore.  BNE report was quite poor.  When the deal was proposed, it was really a dire environment and thought better to grasp onto eachother when the boat is sinking.  The current environment is now quite constructive.  So I wonder if OBE is still 100% committed.  In theory, the combined company would have better access to financing but now we just got 18 months anyways.  Time, focus, and money was spent on this offer but unsure if OBE should want it anymore.  Offer was not pulled so...

[SharperDingaan]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

Let's be fair here - I applaud Liberty for keeping track of things.  There has been blatant cheer-leading on this stock by some individuals, who have essentially claimed that it is on the verge of breakout, as it lost almost 100% of its value, shares consolidated 7-into-1 and then price dropping further per-share well below pre-consolidation, etc.  I see Liberty's comment as an attempt to keep others honest.

Nope. Same as the proverbial bitter waitress, some folks just cannot move on  ;)
It has been 10 YEARS+ since PWE hit its peak. All that time, and never took advantage ...  it's all on the HODLer.
Now with a little luck ..... that current 100M of partially guided FCF will be a little higher tomorrow.

SD


 

[SharperDingaan]

The question I have is where OBE should want this deal anymore.  BNE report was quite poor.  When the deal was proposed, it was really a dire environment and thought better to grasp onto eachother when the boat is sinking.  The current environment is now quite constructive.  So I wonder if OBE is still 100% committed.  In theory, the combined company would have better access to financing but now we just got 18 months anyways.  Time, focus, and money was spent on this offer but unsure if OBE should want it anymore.  Offer was not pulled so...

If the deal wasn't wanted, the tender would have been pulled. This is about land consolidation, cost savings, and raising the price premium that a future buyer is going to have to pay for them. The 'for sale' sign on OBE is still out there, they've well publicized the goods, and now we're just haggling over the price.

"Why fight When You Can Negotiate"  ... Captain Jack Sparrow, Pirates of the Caribbean

SD

[Joe689]

But 'luck tomorrow' means a higher debt load and I think higher debt multiples depending on how well BNE's aggressive drill plan goes.  They have kept those results quiet.  Hard to tell what BNE can do after their massive program.  Their Q4 was horrendous. 

Eitherway, if you combine the companies, you still need significant debt reduction.  Nobody will assign proper equity multiples until the debt gets to safe levels.

[Liberty]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

This would be off-topic in this thread. But I post about plenty of good companies, many of which have been multi-baggers for me.

[Liberty]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

Let's be fair here - I applaud Liberty for keeping track of things.  There has been blatant cheer-leading on this stock by some individuals, who have essentially claimed that it is on the verge of breakout, as it lost almost 100% of its value, shares consolidated 7-into-1 and then price dropping further per-share well below pre-consolidation, etc.  I see Liberty's comment as an attempt to keep others honest.

Nope. Same as the proverbial bitter waitress, some folks just cannot move on  ;)
It has been 10 YEARS+ since PWE hit its peak. All that time, and never took advantage ...  it's all on the HODLer.
Now with a little luck ..... that current 100M of partially guided FCF will be a little higher tomorrow.

SD

If you re-read this thread, you have been buying all the way down and claiming bottom like 15 times.

This thread was basically 100% positive for years, which is why I like to keep track of it, there's a lot to learn here, like the SD thread or the ALS thread or the SHLD thread.

You don't just study success stories to learn. This includes my own mistakes, I don't shy away from them, and I encourage others to do the same with theirs. Moving the goalposts and thesis drift has cost many people a lot of money, so it's good to keep it in mind.

[Joe689]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

Let's be fair here - I applaud Liberty for keeping track of things.  There has been blatant cheer-leading on this stock by some individuals, who have essentially claimed that it is on the verge of breakout, as it lost almost 100% of its value, shares consolidated 7-into-1 and then price dropping further per-share well below pre-consolidation, etc.  I see Liberty's comment as an attempt to keep others honest.

Nope. Same as the proverbial bitter waitress, some folks just cannot move on  ;)
It has been 10 YEARS+ since PWE hit its peak. All that time, and never took advantage ...  it's all on the HODLer.
Now with a little luck ..... that current 100M of partially guided FCF will be a little higher tomorrow.

SD

If you re-read this thread, you have been buying all the way down and claiming bottom like 15 times.

This thread was basically 100% positive for years, which is why I like to keep track of it, there's a lot to learn here, like the SD thread or the ALS thread or the SHLD thread.

You don't just study success stories to learn. This includes my own mistakes, I don't shy away from them, and I encourage others to do the same with theirs. Moving the goalposts and thesis drift has cost many people a lot of money, so it's good to keep it in mind.

In SD's defense, you are not aware of what his basis is?  Maybe he correctly sized his positions so that it never became more than over weight. 

Didn't Buffet say something like if you liked it up there and it is now down here, you should be happy to buy more.  Sometimes it takes longer than want, always does. 

Anyways, I was not early as some but was down 80% and double, tripled down.  I got up big time.  Took short term gains against my long term losses so at par.  Now letting house money ride....  Took 4 years but have unrealized 100% gain on original investment

This was my second trip too.  Bought at yearly lows before Dodsland sale when it doubled then too.  Volatility pays if you stick w it

[SharperDingaan]

We started at $21 CAD (post 7:1 RS), averaged down, bought/sold, reinvested gains, and used the option market to our advantage. Largely the same $ investment divided over many more shares, taking our cost base < $1 CAD, with most of the volume in the CAD $0.30-.60 range. Obviously, we have been very good at it.

It has been pretty obvious, for a very long time, that OBE has very good rock/heavy oil. The problems were largely legacy culture, repeat horrendous managements, terrible reputation, legacy obligations, too much rock, a locked out capital market, and extended record low commodity prices. All temporary, if they could both get their act together, and wait it out.

They have now turned it around, they weren't able to sell lands when they were desperate to, and today they are benefiting. They are unlikely to make it through this cycle remaining independent, and our holding will probably end up exchanged into a more liquid, and marginable, dividend payer. 

Our strategy is to simply put ships to sea, the OBE, SFK, ADV, etc. If a single venture is successful, we're set for life; but we expect that most ventures are either going to fail, or get pirated along the way. We just prefer shares over options, we recognize that there are always going to be errors, and we're OK with it.

Some folks can tolerate the risks, some cannot.

SD

[John Hjorth]

Could you provide us with one, Liberty? I mean its cool dragging people on shitty investments, but why not let em know where they should be looking?

Let's be fair here - I applaud Liberty for keeping track of things.  There has been blatant cheer-leading on this stock by some individuals, who have essentially claimed that it is on the verge of breakout, as it lost almost 100% of its value, shares consolidated 7-into-1 and then price dropping further per-share well below pre-consolidation, etc.  I see Liberty's comment as an attempt to keep others honest.

Nope. Same as the proverbial bitter waitress, some folks just cannot move on  ;)
It has been 10 YEARS+ since PWE hit its peak. All that time, and never took advantage ...  it's all on the HODLer.
Now with a little luck ..... that current 100M of partially guided FCF will be a little higher tomorrow.

SD

If you re-read this thread, you have been buying all the way down and claiming bottom like 15 times.

This thread was basically 100% positive for years, which is why I like to keep track of it, there's a lot to learn here, like the SD thread or the ALS thread or the SHLD thread.

You don't just study success stories to learn. This includes my own mistakes, I don't shy away from them, and I encourage others to do the same with theirs. Moving the goalposts and thesis drift has cost many people a lot of money, so it's good to keep it in mind.

This is an entertaining exchange [for me, not particularly PWE related, sorry].

Disclosure : Now, many years ago, I bought a few shares in CSU.TO, based on what Liberty had then posted here on CoBF about CSU.TO. After that, I simply did nothing, but continued reading the CSU.TO topic here on CoBF. [-Still doing absolutely nothing! [ : -) ].

-A few years later [when I was in the "reading CoBF in an other dimension" mode] reading basically every  CoBF members' posts member-by-member, I stumbled on a similar Swedish company, brought up by a fellow CoBF member here on CoBF, a company with the ticker : VITEC.STO, I got attracted to the business model once again. [I haven't so far sold any those shares, either].

- - - o 0 o - - -

It's all about picking up "your fights" - some are easier than others. Make your pick - they all depend on who you are.

[yzstevie]

So the company decided not to go ahead with the merger.  What do you all think?  I think it's a shrewd move, which speaks well of the current management. 

[yzstevie]

So the company decided not to go ahead with the merger.  What do you all think?  I think it's a shrewd move, which speaks well of the current management. 

[enoch01]

Following SD’s advice over the long term is hazardous to your wealth.  Keep it up Liberty, I’m sure you will help people not lose money, which is rule #1.

[Liberty]

In SD's defense, you are not aware of what his basis is?  Maybe he correctly sized his positions so that it never became more than over weight. 

Didn't Buffet say something like if you liked it up there and it is now down here, you should be happy to buy more.  Sometimes it takes longer than want, always does. 

Anyways, I was not early as some but was down 80% and double, tripled down.  I got up big time.  Took short term gains against my long term losses so at par.  Now letting house money ride....  Took 4 years but have unrealized 100% gain on original investment

This was my second trip too.  Bought at yearly lows before Dodsland sale when it doubled then too.  Volatility pays if you stick w it

I'm talking about what he wrote. I don't know what he did, but I know what he wrote, that's quite clear on the screen.

[Liberty]

We started at $21 CAD (post 7:1 RS), averaged down, bought/sold, reinvested gains, and used the option market to our advantage. Largely the same $ investment divided over many more shares, taking our cost base < $1 CAD, with most of the volume in the CAD $0.30-.60 range. Obviously, we have been very good at it.

It has been pretty obvious, for a very long time, that OBE has very good rock/heavy oil. The problems were largely legacy culture, repeat horrendous managements, terrible reputation, legacy obligations, too much rock, a locked out capital market, and extended record low commodity prices. All temporary, if they could both get their act together, and wait it out.

They have now turned it around, they weren't able to sell lands when they were desperate to, and today they are benefiting. They are unlikely to make it through this cycle remaining independent, and our holding will probably end up exchanged into a more liquid, and marginable, dividend payer. 

Our strategy is to simply put ships to sea, the OBE, SFK, ADV, etc. If a single venture is successful, we're set for life; but we expect that most ventures are either going to fail, or get pirated along the way. We just prefer shares over options, we recognize that there are always going to be errors, and we're OK with it.

Some folks can tolerate the risks, some cannot.

SD

Yeah, you always have nice stories to tell afterwards where you made all the right moves. But if you go back and look at what was going on in real-time, it sounded different. I wonder why.

[SharperDingaan]

We post for ourselves only, in real time, and for our own future reference. Over time we will be both bang-on and dead-wrong, we’re OK with that, and it’s just part of the process. We’re private, and really don’t give a sh1t what others might think.

If someone doesn’t do their own DD, and simply clones us; they deserve everything they get.
If that creates bitter waitresses, so be it. It is just not our problem.

We just do a version of the Taleb bar-bell. He uses out-of-the money options, with a bleed every month, that is recovered through the few winners. We do the same thing, but with out of favor juniors, and write-offs recovered through the few winners. And like Taleb, the other side of the bar is a low-risk treasury/good risk management. Classic value investment, but not your grandpa’s approach.

As this approach has done for Taleb, it has also worked for us. We don’t blow up because we keep taking our original capital out, to pay off all our debt, fund new ventures/life experiences, and reinvent. Sure, if the house-money goes to zero tomorrow it will piss us off, but ultimately - it really will not matter.

If this isn’t you, don’t try to clone us.
There are already way too many bitter waitresses in the world.

SD

[Gregmal]

If nothing else I think there is some inconsistency to people who dont post informative personal takes on an investment, or make any effort to indicate what they are buying or selling, ragging on people who do. Transparency, for better or worse, is always admirable. Even if its admirable simply in its futility.