Hi Richard,
I am not too worried about the two year limit for the new shares. If the production has increased to over the 3,000 that they are predicting, then the stock should be well above where it is today and institutional buyers will probably in. Which will give it some support. I don't know if I will still be in this stock in two years anyway. I'm more of a trader and just hold onto the ones I think have very good long term potential. OLEX has not shown that to me yet. I think that since National has just started to cover them, they have not lined up any of the financing yet. They will most certainly help on the $10M OLEX is planning to raise later this year for more acquisitions. I hope that they could raise the production level as much as they say, but if they have "problems" and trouble meeting that by summer, I will probably be out. We'll have to see how it unfolds. The .25/share that I talked about was the amount that they could earn without having to pay any taxes (the 5Mil tax loss carryforward). This will help them increase the earnings/share faster than normal. However, if they do reach 2,000 bls/day production by July, that would give them about .21/share earnings for the last 6 months of '97. (assuming $18 profit/bl, 6 days/week) Which in its own right should put the stock around the $6 range. (assuming .43 in annual earnings [forward looking for one year] and a PE of 15) I don't know why it went down to .29 either. I have a hunch it was MM playing with it and trying to cover with really cheap shares, but can't prove it.
Have a good day,
Eric |
