RE: Offer7 Mar 2025 11:21
Havent read all the messages below yet, but some initial figures as follows. Looking at just the business/operational side of things, some side by side combined figures below based on 2025 guidance issued by both ENQ and SQZ. Displayed as ENQ % / SQZ %
Production: 51% / 49%
Revenue (my estimate): 59% / 41%
EBITDAX (my estimate): 60% / 40%
2P: 56% / 44%
Obviously just a selected snap shot, but those metrics should imply ENQ get around 60% of the combined. They have much greater revenue and EBITDAX, and generate more free cash flow. AND production is slightly higher.
But RNS states SQZ would have a majority. How much of a majority is the big unknown. Based on the undisturbed market caps, ENQ should have only 30% of the combined. But that's down to E's crazy cheap valuation. And on the surface it's not nice to see ENQ potentially using super cheap shares as currency. But AB has a big stake and I'd like to think he's not a moron and isn't going to shoot himself in the foot. What would make sense and be fair is to agree the % ownership split of combined based on a more sensible ENQ valuation, copying what HBR did with BASF/WD which priced HBR shares much higher than what it was trading at.
Another factor is the SQZ dividend. Are SQZ shareholders going to be happy/approve deal if they get a materially lower dividend in absolute terms post-deal? Would naturally think not, otherwise why approve it. You triangulate from there and that sort of sets a floor on price. At a 35% / 65% split and a $150m post-deal dividend, ENQ and SQZ holders would get a $53m / $98m dividend which I think would be a floor of acceptability (at least from my POV). Note SQZ holders' cash divi in 2024 was $114m.
Sign In
Follow the stocks
