Charles and Bryon, Two replies in one.
Charles, I would suspect that drilling is parceled out on a bid basis to independent oil drillers. Don't know if there is a play here other than Schluberger or Haliburton.
Bryon,
PDP has only one class of Pfd, 6 1/4% issued 03-24-94, 3.3M shares @ $50/shr, convertable to 1.7778 shares common. After May 30, 1977 PDP can force the conversion of the Pfd to common if the common is above $35/shr. With 30 days notice, PDP can call the Pfd, if called today by PDP they will get it back for $52+/shr CASH PAYMENT.
Could it be, that MXP & PDP set the $5 min so that the 1/7 ratio would increase the common of PDP to the $35 level and therefore allow PDP to force their Pfd to convet and stop paying the 6 1/4% cash payment.
(Pioneer will have $1.3B in debt and is interested in reducing it as quickly as possible, including the sale of $300M of properties.)
If so, 1 shr PDP Pfd = 1.7778 cmn X $35 = 62.22 nice return over a $50 cost. Picked it up from somewhere that RR would convert his Pfd to common. 7 pfd = 1.25 cmn X $35 = $43.75 a current price of $6.25 for MXP Pfd. MXP Pfd is convertable to one share of common at anytime, if I remember correctly. If you convert now you will get a 25% incentive, no guarantee what will happen later.
Let me know what you think. Believe that RR & Co spent a lot of time checking out all angles of this deal and put it together right. |
