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Hi Folks,
One thing that might get this stock to have real boosters is the increasing valve and desirability of the assets.
The cost of building new rigs has gone through the roof with all the increases in energy/materials/labour costs, and it takes time to build a new rig. The GMS fleet is relatively young and although there was a hefty write down last year the true valve of the assets in todays open market is almost certainly higher (perhaps significantly higher) than the current value on the books.
Just a thought ......
I agree, nemo. Asset management is another route to reducing the debt, and the current environment will only be beneficial to the valuation of what they have.
How does a revaluation of assets help pay down debt Wiggy? Surely that only helps with the debt/asset ratios on the books, unless they start selling there assets to pay down the debt which they won’t and can’t really do.
It will both help with the reported debt ratios, and increase the marketability of the assets, if they want to explore that option. No great controversy there.
So how would increasing the marketability of the asset pay down debt? Very much doubt they’d sell the assets after reevaluating them do you?
Entirely depends on what someone is willing to pay for them, of course.
Suppose they could sell them for $400m, pay the debt off and all swim away.
Or, someone else could be interested in the assets........ That's were the real excitement would come - but I'm not going to hold my breath.
But, I have been in the oil business for over 40 years and seen a fair few acquisitions and consolidations, sometimes the only way to grow quickly is to buy the assets of another company - along with the company . However, given the lopsided distribution of shares in this company it's not a very likely scenario, but if someone did build a stake and look to drive a wedge between the two principle players - then we would all be 'laughing all the way to the bank'.
Even without the above scenario I still think there is plenty of upside, but Amtech is right - until the issue of the possible dilution is resolved there is a level of risk that keeps a lid on the price.
Amtech has been saying the possible dilution keeps a lid on the price at 3.7p, 4.7p, 5.7p, 6.7p, 7.7p… sooner or later he has to get something right by pure chance. I suspect the willingness to asset purchase may change if/when the psychology of the market moves from anticipating a cyclical reversion in oil prices, to acceptance that structurally higher prices are here to stay.
Just don’t mention the $50m Nemo, Wiggy will attack. He’s a winner in life you know.
Please mention the $50m all you want. Since amtech started mentioning it the shares have doubled :)
Good job you traded out on the sly then Wiggy as it drips it’s way back down. The lower it goes the more dilution it creates when they raise the $50m (£38m) this year, £68m Mcap at present. Although the company has warned investors of that scenario.
To create dilution, they can simply price it at a steep discount, which is what they did last year (50% discount) - share price doesn't matter.
I’d do a bit of research on that 4C
Yeah, I strongly suggest you to do it ;)
“The share price doesn’t matter”
Yes it does, if raised the $50m is a fixed amount, the sp is variable. If the sp is lower dilution will be higher, if the sp is higher dilution will be lower.
I know this is difficult for you to comprehend what you read, but I am gonna suggest it anyways....
The share price doesn't matter, its the discount/premium at which you place that determines the dilution. GMS priced the previous raise at a whopping 50%++ discount, which meant dilution was huge. Price could be at 15p and they can price the new shares at 5p and screw everyone
Do you think that’s a realistic possibility?
The ability and willingness exists, based on what we saw in the last one
I presume you’ve sold and taken your profit then like Wiggy did.
Why would you presume that?
Just from your last couple of posts, if you think that possibility exists.
I highlighted the risk that exists, as with any investment
Ummmmm isn’t that what I did!
You tried to make a mountain out of a wrong molehill....