Richard / Stampeder Exploration
Gulf intends to offer 0.69124 Gulf shares for each Stampeder share. Based on Stampeder's closing price of $5.70 on July 25, 1997, the offer equates to a premium of 31 percent. The exchange ratio was set based on the July 24, 1997 closing share price of $10.85 for Gulf and a value of $7.50 for each Stampeder share. The total value of the transaction will be approximately $1 billion, based on 98.5 million shares outstanding (on a fully diluted basis) and approximately $300 million in net debt.
The key is the ratio as mentioned above. On the day of the announcement, Gulf shares fell on the news to $10.10 and have traded around that price since. I just went and got current quotes and I will expand on these prices. GOU = $10.15/share X .69124 = $7.00 Stampeder exchange share value. SDX is trading at $6.85/share which appears to be $0.15 undervalued.
I suspect the markets will now keep prices coordinated with each other, +/- a dme or so.
I don't believe the offer is dilutive to Gulf Canada. Meaning, after the acquisition is final, earnings or cash flow will not be diluted on a per share basis. I haven't done any calculating, just going on comments made by CEO of Gulf. However, I think the market reacted as though there is to be dilution.
This is a good deal for Gulf Canada, in fact better than the CS Resources deal they missed out on. I've done quite a little research on heavy oil operators. The latest article in the Calgary Herald spells out the game plan that Gulf has in regards to all their heavy oil properties. I guessed that this was going to occur and I think it is a great approach by Gulf. It eliminates heavy oil from the surface of their operations and puts it on a spun off company that they will probably have a high interest in. Heavy oil is not an in-thing at the moment - at least in my opinion. Results of spinning off the company should have a positive impact on Gulf's debt situation also.
I want to mention one more vision I had with my crystal ball. Gulf has one more piece of the puzzle to go in order to organize a very strong heavy oil operation, equal to their peers in this operating area. Don't be surprised to see another friendly takeover by Gulf, this time -- ELAN Energy. I don't believe CS Resources offered as much to Gulf as ELAN does. Technology is very comparitive, land fits and infrastucture appears better structured.
Just one man's opinion. |
