SharperDingaan Posted June 8, 2019 Share Posted June 8, 2019 Laugh all you want, but all OBE need do is cross the CAD 5.00 (CAD 0.715 pre RS) threshold for an institutional investor. We will be up 155% on current purchases, and 40% YTD. Should OBE re-rate at some point to 4x capex (sub for FFO), or CAD 0.945 pre RS, we will be up 235% on current purchases, and 85% YTD. We lke our odds. For us, OBE need simply return to industry average. If we just sold out at that point, we could immediatly return proceeds to our bond portfolio and make the house purchase. A house purchased from the proceeds of todays pessimism in the oil patch ;) We're just making lemonade out of todays lemons. To each his own. SD Link to comment Share on other sites More sharing options...
tombgrt Posted June 12, 2019 Share Posted June 12, 2019 Laugh all you want, but all OBE need do is cross the CAD 5.00 (CAD 0.715 pre RS) threshold for an institutional investor. Oh, is that all? Also, enlighten me. Why does it deserve industry average valuation? Link to comment Share on other sites More sharing options...
constala Posted June 13, 2019 Share Posted June 13, 2019 Some selling pressure was expected after the reverse split, but not this rout. Down close to 50% in 6 weeks. Is the bond placement failing? I can't see Peace River not closing. EV is now 35% of NPV 10 of Proven and Producing reserves. Crazy cheap. Management called the stock dramatically oversold 2 weeks ago..We are down 25% since. That should justify a buyback program as a higher priority especially with relative value (less netbacks on the Cardium at WTI 52). Otherwise OBE could and should be taken private by Front4 and the likes... Link to comment Share on other sites More sharing options...
bizaro86 Posted June 13, 2019 Share Posted June 13, 2019 Curious what gives you confidence on Peace River closing? The buyer (Highwood Oil) is publicly traded. They have no cash, and don't really have any room to issue more debt based on their current asset base. They just went public through a reverse merger with a block chain company less than a year ago. IMO, their shares are significantly overvalued, which is probably partially due to the significant number of shares off the market on lock-up. They will need to raise ~half their current market cap in equity and debt on the new assets. Maybe that's possible, but I wouldn't say it's a slam dunk. I know OBE didn't disclose the buyer, but if you check Highwood's website it's pretty clear they are the buyer. Link to comment Share on other sites More sharing options...
bizaro86 Posted June 13, 2019 Share Posted June 13, 2019 Also, the deal is contingent on financing, so if they don't get the money OBE is out of luck. Link to comment Share on other sites More sharing options...
SharperDingaan Posted June 14, 2019 Share Posted June 14, 2019 A lot of retail has more invested in this that they should have, and are just looking for something/where to place blame; we're just seeing turnover of the shareholder base, lots of venting, and advantage being taken of it. At only 73M shares, the float is only 4-5% (2.9-3.7M shares) at best; and over the last 4 days (post RS) - total trading has burned through almost all of it. We will know within 2 weeks (Jun-30) if we have a refinancing and/or a sale. A great many employees will also be in a position to finallly determine if they are likely to still have a job beyond Q4. Not a lot different to the dissappointment of the Toronto Raptors losing game 5 by 1 point; then winning game 6 - and ultimately taking the championship. Deep value investors like to chant 'buy when there's blood in the streets!', but when it actually happens .... apparently can't pull the trigger. Obviously we have a different POV to many others, but respect their angst. SD Link to comment Share on other sites More sharing options...
roundball100 Posted June 14, 2019 Share Posted June 14, 2019 Yes, it seems just like basketball. Whoever shoots, there is a 50% chance that the ball goes in each time. It doesn't matter who the player is, each shot has a 1 in 2 chance. :-) Link to comment Share on other sites More sharing options...
bizaro86 Posted June 14, 2019 Share Posted June 14, 2019 Often when there's blood in the streets, someone is actually dying. Value investing, imo, is about knowing when it's just a flesh wound. I'm not saying either way about OBE, and I have no position. But I did think some info about the buyer might be interesting for some. Link to comment Share on other sites More sharing options...
constala Posted June 14, 2019 Share Posted June 14, 2019 "We will know within 2 weeks (Jun-30) if we have a refinancing and/or a sale. " I would not hold my breath on the refinancing- they started roadshowing the bond idea with WTI at 58...we are now at 52, everybody knows that their deleveraging can not really start below 55. And management said they would "only execute under favorable terms". Expect delays until crude market is better. Regarding the sale, I am more optimistic, I would assume bank financing is available on Peace River for the buyer, it is a quality asset. Link to comment Share on other sites More sharing options...
Joe689 Posted June 14, 2019 Share Posted June 14, 2019 Remember that CIC is 45% partner with a tag along clause. I would assume that highwood, and their financiers, needed to be prepared for taking the whole asset. But CIC has already said, they are committed. Therefore, I think it is more likely that is closes as they will only need half the money. All I know is that we trade around 22k per flowing. Barrel base that declines around 20%, probably 30% after new program and post PR sale. Liquids weighted. And they have tons of inventory.... Look at their new program, and tell me those are not outstanding results... the wells can pay back in months in not years https://www.obsidianenergy.com/press-releases/obsidian-energy-announces-an-operational-update-on-cardium-drilling-program/ Just bizarre. Deep value for sure. Someone will be right here. Not sure who Link to comment Share on other sites More sharing options...
Liberty Posted June 14, 2019 Share Posted June 14, 2019 Someone will be right here. Not sure who With the equity down 99.3% since 2011, I'd say that so far, the only winners are management (getting millions in salaries) and short-sellers. Link to comment Share on other sites More sharing options...
Joe689 Posted June 14, 2019 Share Posted June 14, 2019 Right, those who were super early and/or did not average down enough, are in big trouble. Will never be made whole again. So yes, mostly losers. Just wondering how people will make out who bought recently. Price discovery is ongoing. Link to comment Share on other sites More sharing options...
tombgrt Posted June 14, 2019 Share Posted June 14, 2019 Can anyone give me an update on the mathematics of the coin toss, please? Is this still a 50/50 given it has dropped 50% from the last coin toss on 03/11? I'm a bit confused. Thank you in advance for your expertise. Link to comment Share on other sites More sharing options...
SharperDingaan Posted June 15, 2019 Share Posted June 15, 2019 Apparently, as value investors, we suddenly can't even wait a full reporting period? We're now momentum traders? - or horror of horror, day traders! To use a hoops reference. If I'm a Kawhi Leonard the ball goes in the hoop, maybe 85% of the time over a game. 50% for just trying (it either goes in, or it doesn't) + 35% for my skill. But I'm a OBE investor ... with no skill. The ball has only gone in 15% (profitable swing trades) of the time so far, 50% for just trying (it either goes in, or it doesn't) - 35% for my LACK OF skill. Grumble, grumble .. what should I do? Seems to us that you can either sell, hold, or buy more. You have no skill, and are momentum trading beyond your ability. Cut bait, and preserve your sanity. You've realized you're only in the 2nd quarter, the game has some way to go. Take a powder, enjoy the rest of the game. You've realized that if it pans out you're going to have a permanent loss. Average down enough for the condition to put you into a material profit instead. In the words of ZZ Top, 'I Gotsa Get Paid' :D We the board, just don't want to hear it, but those are your choices. Obviously, we wish you luck in your decision. SD Link to comment Share on other sites More sharing options...
doc75 Posted June 15, 2019 Share Posted June 15, 2019 To use a hoops reference. If I'm a Kawhi Leonard the ball goes in the hoop, maybe 85% of the time over a game. 50% for just trying (it either goes in, or it doesn't) + 35% for my skill. But I'm a OBE investor ... with no skill. The ball has only gone in 15% (profitable swing trades) of the time so far, 50% for just trying (it either goes in, or it doesn't) - 35% for my LACK OF skill. Grumble, grumble .. what should I do? What should you do? You should read a book on basic probability. You continue to write mathematical nonsense. Link to comment Share on other sites More sharing options...
Joe689 Posted July 18, 2019 Share Posted July 18, 2019 Well this investment is making new 52 week lows. No word from management. Actually the PR asset closing got delayed two weeks, and that news wasn't even mentioned by OBE. It came from the acquirer's release Link to comment Share on other sites More sharing options...
Liberty Posted July 18, 2019 Share Posted July 18, 2019 Well this investment is making new 52 week lows. No word from management. Actually the PR asset closing got delayed two weeks, and that news wasn't even mentioned by OBE. It came from the acquirer's release If they can't earn decent returns on their assets, why would someone else pay a lot for these assets? What benefit would someone else have operating them that this company couldn't do (except get lucky with commodity price fluctuations that are outside of anyone's control)? Link to comment Share on other sites More sharing options...
Joe689 Posted July 18, 2019 Share Posted July 18, 2019 Are you talking the Peace River assets that are pending closing? Or the entire company's assets? Link to comment Share on other sites More sharing options...
Liberty Posted July 18, 2019 Share Posted July 18, 2019 Are you talking the Peace River assets that are pending closing? Or the entire company's assets? I was thinking entire company. Private buyer's value for the company as a heuristic. Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 18, 2019 Share Posted July 18, 2019 You buy a commodity company, to bet on commodity prices. Be right; through either luck or skill, and it's the same result. Last year Q2 results were posted Aug-02 - why should this year be much different? Nothing mandates that a completed PR, or loan base determination has to be announced at the same time. https://www.obsidianenergy.com/press-releases/obsidian-energy-announces-second-quarter-2018-financial-and-operational-results/ SD Link to comment Share on other sites More sharing options...
Joe689 Posted July 22, 2019 Share Posted July 22, 2019 Probably anything but silence would help. Announce the date perhaps. Highwood delayed the closing 2 weeks, and told the public. OBE chose not to? Link to comment Share on other sites More sharing options...
Liberty Posted July 27, 2019 Share Posted July 27, 2019 Energy investing is hard. I wonder if they owned this company. https://s.wsj.net/public/resources/documents/Equinox%20letter.pdf?mod=article_inline Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 27, 2019 Share Posted July 27, 2019 A number of truth's buried in that notice .... In commodity stocks, 'skill' adds relatively little value. You have to be skilled at forecasting cycle timing - not stock picking; if you're long only, good stock picking is useless in a down-cycle. You must have a long and stable runway with few restrictions. Ability to continue holding when down 80%, and add more over time. Good risk management trumps good stock picking. Swing trading, shorting, option and future trading, averaging down, etc. It's a long-term game for individuals, not PMs. The nature of long-only PM business, is that it's a temporary engagement, and it only works in an up-cycle. Open a commodity fund at the beginning of a cyclic upturn, and you're a hero. As is the 'dumb' money, that happened to do the right thing, at the right time (luck). But as word spreads - and the longer the cycle goes; your 'investment space' becomes swamped with 'dumb' money, and increasingly 'unstable'. Hence to do well, you must ultimately close the fund before the market crashes ... it's a limited term engagement. However, if your timing was off, & the fund crashes, you're a bum ..... also a limited term engagement. When things head south, investors pull out - forcing loss crystalization. Remaining capital has to generate a stella performance just for the fund to break even, and the funds commercial interests dictate that the PM must hold client hands (shifting customer angst on to themselves), at the worst possible time. Risk management cannot be implementated, as clients only want to hear how the PM is going to get the money back - NOT mitigate (at a cost) further losses. Of course, for those individual investors as short-term orientated as the PM fund (most people) - the PM's, and their woes, are essentially the same; and therefore irrelevant. Whereas for long-term orientated individual investors (the few), the PM's woes are a source of value-add; as those investors typically have the ability to risk mitigate, at the times when the PM could not. So .... if you have the skills to be a good PM, you had better get REALLY well paid for putting up with the demands of OPM - 'cause you could very easily be the long-term orientated individual investor instead. And once you've made your money, do you really need to put up with the demands of OPM any further ;) This time around the PM got burned, but there will be a next time ... and this time older and wiser. He/she takes a year off to recover, and 're-set', then starts again. SD Link to comment Share on other sites More sharing options...
Joe689 Posted July 29, 2019 Share Posted July 29, 2019 Reminder that bad management matters. 500M debt and 100 equity. Cash flow near 150m likely. They need to restructure Link to comment Share on other sites More sharing options...
SharperDingaan Posted July 29, 2019 Share Posted July 29, 2019 Reminder that bad management matters. 500M debt and 100 equity. Cash flow near 150m likely. They need to restructure Quite agreed. Today's management is not yesterdays, and restructuring is well underway. Show me results in the Q2 announcements. SD Link to comment Share on other sites More sharing options...
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