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Strategies & Market Trends : Dividend investing for retirement
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To: JimisJim who wrote (18076)12/26/2013 9:27:11 PM
From: gregor  Read Replies (2) of 34328
 
It is great to do all the DD on subjects that are novel, unique, and unlikely to be repeated. UAN and the relationship to CVI and CVRR would fit that bill. Add fertilizer plants in the US have declined from 45 to under 20 in the last decade makes it even more interesting. Then add competition from Russia, the Ukraine and China, even more interesting.

I have another novel situation. Here goes. I have owned KFN for the last 4 years, good yield, around 8%. They were spun off from KKR . After 4 years I was breaking even until this month when the parent KKR made an offer to buy them out for .51 X the price of KKR. The price gave me a gain of 40% after holding them until the first quarter of next year when the deal should close. Here is the rub. Why was the parent company all of a sudden interested in having the child move back in under a common roof.. The rumor is that KFN closed a deal with EXCO energy last year who purchased 55,000 acres of Eagle Ford shale mineral rights from Chesapeake Energy for over a billion. They announced drilling plans for close to 400 million for the coming year i.e. EXCO. The agreement they have with KFN is really weird. KFN will get a majority of the revenue from the wells for the first year of production after which EXCO will get all of the remaining production. So what is the big deal ?

It's a normal transaction unless of course unless EXCO has found out they own leases in the Eagle Ford sitting on some kind of geologic fault bubble and copious amounts of oil are to be expected making KFN a beneficiary
along with EXCO.

I've gone to the extreme of resourcing drilling county by county in West Texas. geologic data, The thickness of the Eagle Ford shale, the Permian basin. Wildcat drilling in west Texas. Satellite photos etc. So research doesn't have to be boring but in all probability the kind of research that will take you to the bank is probably the boring type.....happy DD....Gregor.
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