Teacherman1 (< 20) Submitted: 5/20/2016 11:31:33 AM Recs: 0
Here is your chance to get in at about the price of the new offering.
AXAS is offering 25M shares at $1.00 per share to raise funds needed to pay current debt, but more importantly to provide for CAPEX for the 2016 program that will bring them back to profitability. They decided to go this route, rather than "give away" valuable assets at "fire sale" prices.
The "knee jerk" reaction is "oh no, they are diluting the stock", but this amounts to only about a 25% increase in the outstanding shares of the company, while providing them much needed cash to boost the overall value of the company.
The risk is that if there is a totally unexpected and huge drop in crude prices, they may not get "the kick" they are looking for, but at least they are not stupid enough to go the bond or note route that got most of the other small E&P companies into the bankruptcy producing box that they all got into.
But even if this happens, it will not put them out of business, it will just delay their recovery.
There are a number of "couch potato traders" who have been playing with the stock recently, who will just see and scream about dilution and then bail out, so you may be able to get shares even cheaper later, but the people who are knowledgeable about the business and sector, will see it for what it is, and your chance to get shares at just above $1.00, will go away.
I have quadrupled my holdings in them this morning, but I have been following this company since 2009, and understand what is going on with them.
Will post a more detailed blog later.
The offering caught me a little by surprise, because I did not get my alert until this morning, even though it went out yesterday.
Remember, the supposedly big losses they had over the last 3 or 4 quarters were due almost exclusively to the mark to market requirements, and not because they were unable to find and produce oil at good prices.
Do your own DD, but this is worth at least a small position, with a "watch to add more" if the opportunity arises.
JMO and worth exactly what I am charging for it. [more]
Just wanted to let you know why I haven't been posting much lately. Am fine and should be up and running by the end of November.
There are currently a lot of "dueling" articles arguing about whether we are in a Bull market undergoing a "correction", or whether we are entering a secular Bear market. [more]
Here is a link to a Thompson Reuters "edited call transcript" from the Yahoo Finance page, which gives you good insight into the condition and management of this company. [more]
While some of them deserve it because of the debt load they are carrying with this downturn in Energy prices, it seems they have all been painted with the same brush. [more]