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Gold/Mining/Energy : Big Dog's Boom Boom Room -- Ignore unavailable to you. Want to Upgrade?

To: Ernest K Brandt who wrote (105367)	7/19/2008 10:20:05 AM
From: Ed Ajootian	Read Replies (3) \| Respond to of 206328

Ernie & bigpike, Baseline Oil & Gas (BOGA) -- quite an amazing turn of events! There are several amazing things that happened here, most notably: 1) BOGA management apparently never bothered to set up some sort of poison pill. Now that Loeb has a supermajority, without some sort of poison pill in place, it would seem most unlikely that even the savvy Alan Gaines can keep from losing control of his company. I guess they figured they were too far below the radar to have to worry about a poison pill. I suppose that ended when they put out that blockbuster year-end PV10 # of $284 M of reserves. 2) Per the 13D that was filed yesterday, Loeb was able to buy nearly all of the convertible notes ($49.2 M of $50 M total out), for just around par value. It boggles my mind that he was able to get these notes that cheaply. The holders of these notes were clearly in the driver's seat, and stood a good chance of being able to convert at a price lower than the original conversion price of $.73 pursuant to the reset provisions that were due to kick in at the end of the year. 3) Loeb could have just bought the notes and waited a few months for the reset provision to kick in, but, in a strong show of support for the value of the equity, decided to just convert the notes right now, at $.73. Not sure why he didn't just want to wait and see if he could get a better conversion price come December, but the fact is that he didn't. The only unknown is whether Loeb will elect to accept the "make-whole" provision that is contained in the terms of the convertible notes, which would mean he would stand to get another 16 M shares or so if he so elected. Hopefully he will pass on this. Now the value of this company's equity is crystal clear. $284 PV10 value using conservative, year-end '07 commodity prices. Subtract senior debt of $115 M and you get $169 M for the common shares. Assuming that Loeb accepts the "make-whole" provision, we are looking at ~ 120 M shares out basic, 130 M shares FD. That implies an equity value of about double where the stock closed yesterday, $1.30/share. I tried buying more shares yesterday but fell outta the bidding at $.61. The only reason I didn't chase it higher is that I believe there is a chance that the crew that formerly controlled this company, once they realize they are now just passive investors in it, may summarily decide to blow out their stock, irrespective of the price. Depending on how soon they decide to do this and how quickly they try to do this, it could take the stock back down below $.60. Secondly, a reverse split is probably in the cards for this company, in order to get the bid price up high enough to get on Amex, so when that occurs it might take the stock price down below $.60 also.