Merger Monday Sweepstakes
The sweepstakes continue as we eagerly await the next marriage proposal. Oil is $42, gas is stubbornly not moving, and companies are running out of runway. Witness SM’s stock performance today after announcing their Q2 update. “Cost control” means crushing service companies and laying off staff. “Change in working capital” means a reduction in accruals due to dramatically lower spending, expanding the time to pay payables and receiving all the receivables.
But when you don’t do things, your production declines, the depths of which will be seen in Q3. So … tie ups will happen and here are my picks (it’s IB advice without the fees!)
P.S. this isn’t investment advice and they will be 0 premium stock deals, but the footprints make sense.
EOG-CXO
COP-DVN
CLR-WPX
PXD-FANG
PE-cdev
OXY-PDC
TOT-APA
XOM-XEC
MRO-MTDR
OVV-QEP
SM-CPE (merger)
WLL – OAS/Bruin (post C11 emergence for all three)
So, we will see. But that’s my bet.
According to an older banker brother there are actually 3 types of accounting practice: GAAP, Non-GAAP and BigGAAP…..biggaap is Cash minus all Liabilities…………………………..That’s probably the most accurate way of “valuing” many of todays oil companies.