Looks like today's knock made a few people nervous. Cause or effect is the question?!?! In any event this was just sent out by one of the RBS brokers (unedited by me):
We are waiting on a complex sale negotiation for Texon's Eagle Ford Shale assets. The share price is trading as if there is a problem with the deal which, as stated clearly by the board at the AGM, there is not. RBS Morgans is advising TXN on this transaction. The company has announced they are in negotiations with several parties regarding a transaction at either the asset or company level, and will choose the one that gives the best outcome for shareholders. At the current share price (51c) TXN is valued at $15,000 per acre of Eagle Ford Shale land alone. A number of deals have been done in the immediate surrounding area at between $25-$30k per acre, making Texon cheap even without considering the other assets they own and the fact they hold 10c per share in cash.
Don't assume that because the share price is falling there is some fundamental problem with the company, or the asset is not high quality. The transaction they are attempting is highly confidential and no specific details can be announced until there is a firm bid so do not panic. No rational company would write a substantial cheque for an asset/company like this without doing due diligence and considering the implications to their own share price. TXN is not the only Australian oil and gas company who's share price is coming under pressure in these testing times. Aurora (fellow EFS company) has fallen from $4.20 to $3.10, Senex has fallen from $1.17 and currently raising money at 74c and Beach Energy has fallen from $1.40 to $1.02, all in the same period that Texon has been 'up for sale' and has traded between 50 and 65c. The company is focussed (and correctly so) on getting the best deal done for shareholders in a time frame that will obtain the best price from the winning bidder. The outcome must be results focussed. Should the sale be in the form of a corporate play or a joint venture deal then the negotiations are extremely complex - involving further due diligence on Texon the company tax laws across the US and Australia, and structure that the assets are held in. Its far more complex than just a data room with information about an oil & gas property. Our analyst maintains a $1.04 valuation on TXN (whole company) and a Buy recommendation.
TXN Price at posting:
51.0¢ Sentiment: Buy Disclosure: Held
