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Gold/Mining/Energy : Big Dog's Boom Boom Room

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To: RevoltNapper6 who wrote (168501)	6/9/2012 6:09:24 PM
From: Ed Ajootian	2 Recommendations Read Replies (2) of 206182

Revolt, Ridgeline Energy Services (RLE.V) -- the final prospectus was filed last Wednesday so I'm expecting to see news of this financing closing on Monday or Tuesday at the latest. Some interesting tidbits from the final prospectus. In the table showing "use of funds" they allocate some money for a small acquisition; I'm betting that it is for the acquisition described in a recent update by Mackie, see excerpt below: "ANOTHER ACQUISITION ON THE HORIZON The Company is looking to acquire a company which constructs the convergence tanks used in Ridgeline’s water treatment system. The target company currently generates ~$2mm in annual revenues with EBITDA margin of about 50% according to Ridgeline. We expect Ridgeline to pay $2mm in cash consideration and another $1.5mm in Company shares for this acquisition based on our discussions with management. The key advantages of this acquisition include: ?? Cost Savings: Each 4-train water treatment system contains two convergence tanks. We forecast that the cost of production could be reduced to $1.3mm per 4-train system from $1.7mm currently if Ridgeline is successful in acquiring the company. ?? Reduced Manufacturing Time: Ridgeline will have a secure supply and faster access to convergence tanks which should result in reduced manufacturing time. This should give higher confidence to its customers that Ridgeline will be able to deliver on commercial contracts. It is important to note that we do not currently include the possible revenues and cost savings from this acquisition in our forecasts. We will incorporate these forecasts if and when the acquisition is announced." Also, from the table showing recent stock issuances it appears that about 10% of the warrant overhang has been chewed through -- about 1.5M warrants have been exercised so far this year. About hallf of the remaining warrant overhang relates to warrants that have a strike price of $.65 so from a dilution standpoint they are not much of a factor at present. For the next month any significant stock price appreciation could be difficult due to the overhead supply created by the 30day over-allotment option related to the financing, but once we get through that things could get pretty interesting here IMO. I would not be surprised to see news of a new deal with another firm in the SWD business similar to this deal with Kerr, maybe as soon as the next week or so. I think everyone was waiting for the first firm to make the move and now that that has happened the future deals will come by a lot more easily. Although these deals don't have the same headline value as the deals with an E&P major such as EOG, they more than likely are better economic deals for RLE than what they can get from an EOG.

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