by coincidence, I just finished reading an article in todays AFR on Maverick Drilling (MAD)
It is a shale gas E&P in USA (yes, another one).
MAD appointed Mike Yeager CEO about 14 mths ago.
Yeager was BHP Petroleum boss.
He made O&G purchases for BHP some years ago, with mixed results. Now saying big wins coming.
Point is, MAD was $1.20 in 2012, then 60c when Yeager was appointed, but now 13c.
Part of article says:
"Over the past year, he has overhauled senior management, adding technology and engineering expertise, and secured $US500 million of debt financing.
Mr Yeager said that with scope to lift debt funding, further Maverick’s own stock and the support of private equity, “we’re going to be capable of working things that are several billion dollars.”
“The future of the company is well beyond the little thing that we have today, and that’s really what we all signed up for,” he said. “We’ve got a group that’s all dedicated to see if we can’t make this company multiples larger than it is today and have some fun doing it.”
My point is. the premises behind the actions at MAD sound familiar, and have some parallels here (IMHO):
- small O&G coy
- little cash
- handful of good assets
- change of board
- bring in experienced, independent new mgt team
- use debt to grow coy (which is what the ERM deal basically is)
- leverage that debt and new CR to expand/grow much quicker than using shareholder funds alone
- get drilling
- get some mgt and board who have a desire to achieve some positive results (why else, other than a desire to achieve, would experienced guys come to a piddly little coy like EGO?)
Shanghaiguy - I know there have been a number of other O&G coys which have completed transactions to achieve 100% ownership of permits, in order to facilitate farm-downs. I will try and think of them and let you know.
cheers
EGO Price at posting:
0.5¢ Sentiment: None Disclosure: Held
