I've been researching this value proposition myself. Also a long time holder and accumulator.
The simple answer is $11mm -all stock.
Gas processing plants are fixed tangible assets, value varies but the range is $130 -$190mm. Pipelines are also fixed tangible assets with construction costs ranging between $2 - $2.5mm per mile. 25 miles appears to have a value of $50 -$62mm.
Range of deal value would appear to be $180-$250mm.
That said, if they close the deal, these two assets are worth 15x the market cap. Exclusive of the land and production.
They mentioned buying distressed properties in many of the past announcements. It appears the seller(S) have a long term exit strategy given the 18 month lock up on the stock, and dual listing. They have to be looking for a way to get through the oil downturn.
The first question I have is whether they can close the deal. They have obviously been working on the deal for a very long time. They called it a company-maker. If they do close - its a dollar plus stock.
Probably explains the dual listing. With $50 oil and $2.50 gas, if they can get the production to 800 barrels per day they stand to do well.
AOW Price at posting:
10.5¢ Sentiment: Buy Disclosure: Held
