George / Morrison Middlefield
Morrison Middlefield is one of the most underfollowed stocks that I've
seen. Historic trading volume can be considered light. Perhaps the
total shares outstanding has something to do with it. I don't know how
much you know about the company, but it is one heck of an operation
with in depth management. There are 3 principle shareholders in the
company; Morrison Petroleums Ltd, Middlefield Group and Banque
Paribas. Combined, they own 45% of the company (as of 12/95).
Morrison Petroleums Ltd. is one of my TOP TWENTY SELECTIONS.
They have two theaters of operation, Canada and the United Kingdom.
Roughly 35% of production is in Canada, but I think you will see this
percentage increase due to their 50% aquisition of Resman Oil & Gas.
(Morrison Petroleums Ltd. purchased the other 50%)
At the beginning of the year, they had a high debt to cash flow ratio
which may of concerned many. However, their debt right now is less
than 12 months forward cash flow and they are financially on good
footing. Company has also been paying a dividend of $0.08/share
every quarter.
I almost listed company as one of my Top 20 Selections. The reason
why I didn't was my interest in Morrison Petroleums. I have an old
forecast (9 months) which has to be considered obsolete, so I won't
quote those details. So much has happened since. Based upon
their 6-month report, I think it is reasonable to say they will have cash
flow for the fiscal 96 year amounting to around $3.95/share. Shares
are now $18.20. People buying into the company now would only be
paying 4.6X 1996 Cash Flow. This is very cheap, for it's almost a
current ratio since year end is only slightly more than 2 months away.
By the way, these stat's are based upon fully diluted outstanding
shares. On the earnings side, I would think $1.45/share is a number
you can use for 1996. Multiple here is 12.6X earnings per share. I
think this is a low ratio also based upon their record of growth. With
their inventory of prospects and rate of past successes, there is every
reason to believe they will continue growth at an accellerated rate over
at least the next two years.
The company's expertise is in engineering and using techniques which
have proven very successful for them. As they step up into further
exploration, cash flow and earnings multiples will increase. To conclude,
Morrison Middlefield is a great story and is yet to be discovered by
investors, both public and institutional. One problem, there are fewer
than 6mil shares outstanding. I don't know what management owns,
but between them and the principle shareholders, there aren't many
shares left for anyone.
Just one mans opinion.
PS: Don't make any buying decisions based upon my estimates for 1996.
Best to call the company and ask what their latest estimates are. If you
do so, please post them here.
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