Opinions
Joanne A. Hruska, CFA
Bonavista Energy Corp
BNP-T
TOP PICK
Jul 16, 2014
$14.810
Stock price when the opinion was issued
oil
gas
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SELL
From a trading perspective you can take a shot and buy it. But you want to flip it. It is not as cheap for the risk. Balance sheet is heavy with net debt over cash flow is 5.3 (you don't want to be over 3) They have bigger problems. Tough one. The Management has skin in the game but their balance sheet problems are very big.
oil
gas
SELL
What to do with the Bonavista debt deal? https://globalnews.ca/news/7088006/bonavista-energy-calgary-company/ A sad ending to a good company with fine assets and managers. Problem was that their debt was maturing in November 2020 and debt holders refused to extend that debt two-three years. BNP also couldn't get debt relief from EDC or BDC. For shareholders, it's a tough choice now. You have three options: 1) you can wait for the 5 cents after shareholders vote in July, 2) sell in the open market now at 7.5 cents, or 3) own a part of this as a private company with no liquidity or trading value until there's an exit strategy 3-4 years later. He will sell (option 2).
oil
gas
More gas weighted than oil weighted. The knock on the stock was that their debt was getting up. Had some management changes at the top, and people were not showing it any love. Have a fair amount of gas production hedged, so if gas doesn’t work out, they are going to be well protected. Have made their operations much more efficient. Feels the valuation is definitely among the lower end of similar sized yielding trusts.