SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Strictly: Drilling and oil-field services
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
To: Second_Titan who wrote (72211)9/3/2000 6:59:56 PM
From: jim_p  Read Replies (1) of 95453
 
Quehubo,

ROIL is selling at a discount because of the Phillips litigation. The market hates uncertainty, which is what makes ROIL a good buy in my opinion.

The company is doing very well, and can afford to pay the Phillips claim if it has to. I guess I feel the claim is more than priced into the stock and it will go up if they are ultimately required to pay or not to pay.

ROIL won the case at the trial level, Phillips reversed the case at the appellate level, and now it is up to the Louisiana Supreme Court to decide if they will here the case or not.

The best thing for the shareholders would be for there to me a settlement, or this case could be dragged out in the courts for many years to come.

There is a good write up on the status of the case in the 10-Q.

Typically companies with a lower debt level and a smaller market cap sell for a lower multiple of DCFPS. I used to use a rule of thumb of 4-6 times for a small cap, or leveraged company, 6-8 times for a company with over a billion in market cap with modest leverage (50%), and 8-10 times for a large cap company with less than 50% leverage was reasonable.

Most analyst will agree that smaller leveraged companies sell at a discount, however at the end of each cycle, most companies tend to trade up to about the same multiple which has been as high as 11 in historical cycles.

Therefore, it is the smaller leveraged companies that tend to due the best in the final stage of the cycle.

Hope this helps,

Jim
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2025 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News