CVYPF: Calvalley Petroleum Inc.

[wawallace]

Ding, Ding.

 

I'm not going to wall of text you guys with every number that I know- but that is a Net Net. To the tune of $18,000,000 not including proven reserves. I know Yahoo Finance is sketchy on Key Statistics Data, and I've got a foreign currency translation problem... and yes, the business itself is harry AF... but a decent size net, net- with at least a 80% chance of long-term solvency.

 

...Anyway, please stop me before I do something stupid.

[Txvestor]

I remember looking at this a while ago. It was at $1.18 and then ran away to mid 2s when the company announced a share tender.

It is definitely a net net here. I remember working capital alone being around 110million, thougn I'm not sure what portion of that is a write down with the sudden collapse in oil prices, as they do tend to stock pile a lot of Oil as they truck the oil. Production is near 5k bpd so they hold a lot of the stuff on site and then truck from time to time.

Plus point is a near 25% insider ownership. They have bought back a lot of shares in the $2 range in the last couple years. I recollect that they do not hedge. Production cost are right around $45 if my memory serves me correct. Needless to say security is a big concern, as they are Yemeni producers even if Calgary headquartered, quite literally they operate in an Al Quaida hot bed. Last few quarters they were near break even and that was before the oil price collapse.

At these prices, you are quite literally betting on a rebound in crude atleast to the $70-80 range within a 1-2 yr time frame, in addition to which you are taking a sizeable country risk. If you jump in size your position accordingly.

Hope my 2c helps. What else is your thesis for considering investing?

 

[wawallace]

That is some next level shit. Thank you.

 

I think they have enough cash, with curtailed operations, to keep the lights on for about 8 years. If the price level is stable from here, the world will be littered with finished wells that just didn't have the cash to turn on the pump. These will be the guys that pick up wells just graded lowly enough to scare out the bigs. Worst case scenario, someone 1/3 XOM's size swoops in and buys it for cash at working capital.

 

All downside from here is cold hard cash. Upside is a 10 bagger over a decade.

[wawallace]

From here I'm going to have to root for closure. My calculations show a 40% return from here on closing assuming liquidation of the fixed assets covers the cost of dissolution. I'm trying to make contact with management to find out what the contingency plan is.

 

P/CF is 4 if production remains intact and oil price recovers.