For those interested, here is the article on ROYL:
+Royale Energy Up 14%;May Become Takeover Target -Analyst
05/07 3:41 PM (DJ)
Story 5485 =DJ Royale Energy Up-2:Gas Reserves Seen As Attraction>ROYL
By Pat Maio
Of DOW JONES NEWSWIRES
LOS ANGELES (Dow Jones)--Shares of Royale Energy Inc. (ROYL) rose 13% to a 52 -week high Monday following the announcement of two big oil industry mergers that have put the spotlight on small energy firms as potential takeover targets.
"The mergers are probably serving as some catalyst, but we believe generally that smaller companies like Royale are nothing more than a potential takeover candidate," said Alexander G. Montano, managing director C.K. Cooper & Co.'s oil and gas group in Irvine, Calif.
On Monday, independent oil refiner Valero Energy Corp. (VLO) said it would buy Ultramar Diamond Shamrock Corp. (UDS) for about $4 billion in cash.
Separately, Williams Cos. (WMB) said it would buy natural gas producer Barrett Resources Corp. (BRR) for $2.5 billion in cash and stock.
Royale Energy, San Diego, has between 15 billion cubic feet, or bcf, and 17 bcf of natural gas reserves in the Sacramento and San Joaquin Basins, an energy field that runs from the Sacramento area to Northern California near the Oregon border.
Montano believes that big energy companies are on the prowl for smaller independent energy firms with natural gas reserves, a hot commodity to own in the California market where an energy crisis has placed a premium on the price of natural gas.
He sees Royale Energy as a potential takeover target following in the steps of similar-sized independents already bought out by other energy firms. He cited, for example, the recent purchase of Texoil by Ocean Energy Inc. (OEI), and Pontotoc Production Inc. (PNTU) by Ascent Energy Inc.
Soaring natural gas prices have added strong profits to Royale Energy's bottom line.
In the company's 2000 fourth quarter, for instance, profits rose to $1.9 million, or 51 cents a share, compared with $168,000, for the same year-earlier period.
The profits were attributed to gas sales that averaged $5.34 per thousand cubic feet, or mcf, in 2000.
According to Montano, the average mcf is expected to push through the $10 mcf barrier in the company's first quarter, about $4 mcf higher than Montano's current estimate.
"My numbers are conservative," said Montano, whose firm does not have a market in Royale Energy's stock.
The company is expected to report its first-quarter results by May 15, and Montano expects earnings of $1.5 million, or 37 cents a share, on revenue of $3.7 million.
Stephen Hosmer, Royale Energy's chief financial officer, was not available for comment.
Shares of Royale Energy closed Monday at $10.20, up $1.20, or 13.3%, on volume of 101,300, nearly fivefold over the company's daily average volume. The previous year-high was $9.71, hit April 20.
-By Pat Maio, Dow Jones Newswires; 323 -658 -3776; patrick.maio@dowjones.com
(END) DOW JONES NEWS 05 -07 -01 |
