Edge Res Share Discussion Threads

[carpadium] 28/7/2015 16:02

Gary, my beef with BN has always been about communication, not strategy on which I rate BN highly, amongst the best. His explanation regarding focus and actions is comprehensive. This huge vote of confidence from business-savvy investors not only strengthens the balance sheet but must also positively influence the loan bank come reviews.

I've an email from BN dated 18/3 this year in which he concludes 'My view is that over the next 12 months we will see those price decks tighten up a lot and stressed assets/companies will flood the market to a degree that has not been seen in my lifetime' He's been proven bang on and so acting accordingly. Given the set of circumstances the oil industry has at present to fund a drilling op to produce another 100-200bod when in all probability he could secure ownership of a distressed asset currently producing 100-200bod for the same outlay wouldn't make much sense, would it. Really suggest you contact Brad with your concerns, would be surprised if you didn't receive a reply. Atb.

[jamesiebabie] 28/7/2015 15:46

Gary - a well was drilled only last month; although it is nit a producer, yet.

I expect any profits to be used to pay down a little debt to allow us to borrow more, it may sound odd, but it could be a reality due to the way it has been arranged. We may have a cash pile, so the additional $500k may be required depending upon the size of the purchase; let's wait and see.

I hate dilution as much as everyone else, but this is his first placing during my time here. We are producing more than ever, we are profitable, our production costs are reducing and we are trying to grow.

I will see what deal he does.

In terms of communication, I do get some decent replies and he doesn't like criticism, but he takes it.

[johnsmithmmxiii] 28/7/2015 13:43

I agree with what you're saying, and I did comment many moons ago that he could have raised cash at c.14pps and drilled more wells more than 12mts ago. He should have tried to get production above 1000bopd as that figure is a good milestone, although it's not benefitting EME or LGO much! That in my book was an opportunity missed but we are where we are and at least we now see a strategy other than doing nothing.

[gary1966] 28/7/2015 13:14

Laz,

It is really good news if Brad starts doing something rather than being in a state of coma with our assets. If it was a mining company I would have seen an RNS 2-3 years ago saying that we are on care and maintenance. Thankfully we aren't but we need to be doing something proactive with the cash we are generating and the undoubtedly fantastic assets we have. It is as though Brad is scared to do anything. I am all for calculated risk and anyone investing in this area must surely have the same mindset. Unfortunately this excludes Brad, the most important person in the company.

I completely agree about not taking debt on, although CDN$500 wouldn't have kept me awake at night, and so am pleased to see the route we are going down this morning, but surely we have produced a reasonable amount of cash over the last 2-3 years that should have seen something more tangible happening, other than the water disposal facility. In my time here I have not seen one well drilled which I find hard to understand for an O&G co with good cashflow.

Really do see it as a huge vote of confidence in the co that we have access to this money but do remember what I wrote initially that this placing has also been done at a cyclically low point and so we really are going to have to get a stonking good buy to justify it and then for something to happen with those assets.

ATB

Gary

[johnsmithmmxiii] 28/7/2015 11:18

Gary, looking from an optimistic pov, let's look at the positives:

The fact that some investors have decided to fund EDG for an acquisition strategy, albeit via share placings rather than debt (which is much safer as no banks could pull the plug) must surely be reassuring that they are putting their faith in EDG and BN?

Taking EDG as an example, imagine if we picked up a company with similar assets for a similar current market cap? £6 mln would be a bargain price.

If we can pick up other producing assets where the current operators don't have the same level of expertise as EDG, we can use this expertise to improve production, increase efficiencies and spread G&A costs over more production.

Yes the dilution could be a problem if these investors took a majority holding, but hopefully the share price will increase on the back of this and the first one or two acquisitions which if successful will make the market take notice of EDG.

As the assets increase and the market cap increases this should also create more demand and bring in more shareholders.

IMHO this is very good news assuming the assets to be acquired are cash flow +ve with underlying upside from proven but not producing acreage.

[gary1966] 28/7/2015 10:53

Carp,

Firstly I would like to stress that I hold 600K shares here but the longer I hold O&G shares the greater my cynicism.

My concern is that Brad has done very little with the assets that we already hold and as I have said previously that was the case when POO was in excess of $100. His communication, I think we have all agreed is poor. My concern with today's news is that we are going to take some severe dilution over the coming months and I can only hope that Brad has the bargain of the century up his sleeve. I then move on from this and wonder, based on how little he has done with our existing assets over the last 2-3 years, what will he actually do with a whole load of new ones.

I know my posts sound negative but Brad moves like a snail and I would rather that he had concentrated on upping our output on the existing acreage when the economics were in our favour. POO could be around $50-60 for years to come and so what is going to be the point of having a load more acreage that Brad is just going to sit on. The economics currently are not that unfavourable due to differential and exchange rate yet still he is doing not a lot with existing assets. I am also a little confused as to why we haven't got a reasonable amount of cash in the bank as I thought we were cash flow positive currently. I would have thought that we had CDN$500K in the bank and so am struggling to understand why we have had to take a 4% dilution now. I thought that was the game plan, hunker down and accumulate cash for aquisition opportunities as they arise. That I could just about live with.

ATB

Gary

[lazarus2010] 28/7/2015 08:46

C$0.08 = c. 4pps using xe.com currency converter so any buys below 4pps are reasonable value, assuming C$ doesn't lose much more against £

[lazarus2010] 28/7/2015 07:58

I posted this back in Jan in response to the results


Lazarus2010 - 28 Jan 2015 - 08:17:01 - 2900 of 3337
in the current circumstances this is about as good as we could possibly expect other than a takeover offer! At least I can sit back and relax with this company and the figures put out today.

With wells following the CHOPS curve and increasing production it will be a little while before we start to experience any declines, and with 100boepd held back which could be opened up to take account of any declines or increase in PoO we seem to be in a pretty decent position.

I am sure that BN will look very carefully at possible acquisitions, and if some companies are not as well managed, and we have sufficient borrowing capacity, and can purchase producing assets which BN believes can be absorbed and make cost savings in terms of admin etc for the acquired assets, then this could be a fantastic opportunity for EDG to grow its asset base on the very cheap and benefit hugely when PoO eventually rises.

Also quite good of BN to give some macro-economic background to the results and the strategy for production, drilling and acquisitions. It all makes sense and might be a 6-12 month downturn but EDG will continue to plough through it and come out the other end with lower cost base and possibly twice the size!

Remember our P2 assets were valued at 23p not so long ago, and if/when PoO gets back to $80+ then those sort of values will once again be realistic and with a bit of growth in assets we could then be ripe for a takeover or to go on a further acquisition spree with improved revenues.

This downturn in a really perverse and difficult to endure way could be the making of EDG!

aimvho

[carpadium] 28/7/2015 07:58

Precisely sleveen, this funding is for expansion and growth, not survival, we would manage that standing still.

[sleveen] 28/7/2015 07:46

I suspect BN has something lined up now, hence the (small) fund raising.

IMHO the main thing to take from this is that we have yet another funding partner (hopefully not too dilutive) to strengthen the balance sheet.

Good move BN.

[carpadium] 28/7/2015 07:38

A very explicit statement as to what investors can expect, well done Brad.

No doubts whatsoever as to their current direction and look forward to reading about their first acquisition/tie up.

[k4r] 28/7/2015 07:31

RNS - Brad Nichol, Edge's President and CEO commented, "Being able to raise new capital in this very challenging market is an accomplishment that few have been able to demonstrate. We have consistently proven it to be one of our core strengths and it is an absolutely critical competitive advantage in our industry; and one that is currently enjoyed by few. To have a new capital partner commit now, as we embark on an aggressive growth strategy through consolidation of medium and heavy oil assets, signifies a major kick-start to Edge becoming one of Canada's high-growth E&P companies. I am especially excited that the Investor Group, combined with the support of our current lenders and major shareholders, should allow us to expand our existing production and growth profile as acquisition prices approach historical lows. We aim to become one of the largest E&P companies focused on medium and heavy oil, for the sole benefit of our existing and new shareholders, and today's news is a significant step in that direction

[gary1966] 28/7/2015 07:30

What Brad doesn't realise is that the lender has just got a chunk of EDG at a cyclical low point. Cuts both ways but I don't see him shouting that point from the rooftops in the RNS. Better start hearing about some aquisitions at some seriously good prices pretty quickly, otherwise this is just dilution for no reason.

[mark10101] 28/7/2015 07:29

Looks like the UK market thought that a discounted placing was on the way, instead a 30% premium with a strategic partner. Let's hope this is a the start of a string of news in the coming weeks as BN indicated in his recent email.

[jamesiebabie] 25/7/2015 19:46

Carp - I have had a similar email.

[mark10101] 25/7/2015 18:58

Carpadium, thank you for posting what you did, us Long term holders needed the boost. Totally understand you not wanting to share any emails in full. Let's hope the news alluded to arrives next week and Friday was a shake.

[carpadium] 25/7/2015 18:01

Sorry Laz, not prepared to copy and distribute a personal email. Maybe I should not have posted just that one closing paragraph but it's done now and was done for the reason I gave above. The last thing I wish to do is jeopardise a good relationship with BN, who rarely fails to address any concerns of a non-sensitive nature I put to him. As mentioned, on a one to one basis I've found BN to be a ready communicator, on a wider market and promotional basis poor and that was the essence of my email.

[carpadium] 25/7/2015 14:33

Don't expect anyone to remember but, see post 2659, I informed posters here that I use a different avatar on LSE, Obadiah, last November.

I don't waste my time or others by posting disingenuous rubbish. The paragraph I quoted from BN was at the end of a lengthy reply I received to my email in which I let him know my feelings regarding his silence and lack of any publicity since March. Unlike some CEOs I could mention BN doesn't take constructive comment personally and actually welcomed the feedback and speaking up.

I decided to post only this passage on LSE because one or two long term holders were talking about selling up. It's common knowledge that Edge are on the lookout for distressed assets which, on BN's terms, is bound to add shareholder value and this to me reads as if they are actioning their chosen path. Hopefully those planning to sell may re-consider and wait a little longer.

[mark10101] 25/7/2015 13:20

JS I frequent ADVFN the most but I track what's on the other boards using discuss the markets (a great way of pooling posts from LSE and III) Odadhia has been posting the whole time I have been in EDG and seems to communicate with BN fairly regularly. Yesterday did look very much like a tree shake with those rapid sells to instigate the fall.

[jamesiebabie] 24/7/2015 23:39

JS - I think it is genuine, for what it is worth.

[johnsmithmmxiii] 24/7/2015 23:07

Can anybody vouch for that poster or get confirmation from BN that the email is genuine?

[mark10101] 24/7/2015 18:06

From Odadhia on LSE, put the razor blade away and dust off your wallet.

Stay put. Final paragraph in an email reply three weeks ago from BN, take heart or dismiss as you wish....... "This is a downturn and we are a junior like many others with less than 1000boe/day of production. For most, it's about survival not exceptional performance. I feel that we are amongst the strongest - if not THE strongest - junior E&P company in Canada and am confident that we will not only survive and thrive in this market but will soon return to newsworthy activities that will not only generate news - but significant shareholder value."

[sleveen] 24/7/2015 17:52

BigT20

I'm now looking for my rusty razor blade...