Damo79
06-03-2008, 02:58 PM
Here's an interesting little microcap I've been watching for a while. A few years ago, I traded it a few times for some nice profits when it was just a cash box company doing nothing except holding a 5% share in Bemax (BMX). At that point, their BMX shares were worth more than the market cap, so I traded on that basis. Ended up missing a big run when they got into the natural gas market though.
Anyway, these days, they're 'almost' a break even cashflow natural gas producer in the Appalachian basin of the US. They started off their gas assets with a purchase of about $10 million of assets (funded by debt). They still have their 5% BMX holding, which is worth a little more than that. They have a slightly complicated structure (for me at least) in which they have a 75% interest in a venture called Empire energy, to which they assign their gas producing wells. They drilled 20 successful wells last year, and are drilling 18 this coming year. The area Appalachian basin is very low risk (with 100% success rate on their first 20 wells).
Definately a microcap, with a market cap of about $20 mil. However, they have managed to score a $100 mil debt facility with Maquarie to fund expansion and drilling, which seems like a pretty big coup for a very small fish.
With listed assets covering current debt, access to more debt amounting to 5x their market cap, cashflows moving towards positive territory, and an funded drilling program coming up, I see this as an pretty interesting spec play (which isn't really that speculative).
1.3 cents at the moment, and that looks to be the support for the last year. I've bought a couple of parcels at that price in the last few weeks.
Cheers
Damo
Anyway, these days, they're 'almost' a break even cashflow natural gas producer in the Appalachian basin of the US. They started off their gas assets with a purchase of about $10 million of assets (funded by debt). They still have their 5% BMX holding, which is worth a little more than that. They have a slightly complicated structure (for me at least) in which they have a 75% interest in a venture called Empire energy, to which they assign their gas producing wells. They drilled 20 successful wells last year, and are drilling 18 this coming year. The area Appalachian basin is very low risk (with 100% success rate on their first 20 wells).
Definately a microcap, with a market cap of about $20 mil. However, they have managed to score a $100 mil debt facility with Maquarie to fund expansion and drilling, which seems like a pretty big coup for a very small fish.
With listed assets covering current debt, access to more debt amounting to 5x their market cap, cashflows moving towards positive territory, and an funded drilling program coming up, I see this as an pretty interesting spec play (which isn't really that speculative).
1.3 cents at the moment, and that looks to be the support for the last year. I've bought a couple of parcels at that price in the last few weeks.
Cheers
Damo