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The Company is an independent energy company engaged in the business of acquiring, developing and producing oil and natural gas.
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bhessel (92.59) Submitted: 11/28/07 9:11 AM : Start Price: $3.80 TMY Score: -60.88
Transmeridian Exploration's (TMY) cardinal asset is their license to develop Kazakhstan’s South Alibek field. There are 72.9MM BBLS of proven reserves there, and TMY has a market cap of $322MM, which means that the company’s oil is being valued at $4.42/barrel…a more reasonable valuation with the price of oil around $60/barrel would be between $10 and $15/barrel. How can this be?The main problem is that it doesn’t seem to be that easy to get the oil out of the ground. The Soviets drilled a couple of dozen exploratory wells back when Kazakhstan was part of the USSR but never found anything compelling enough to develop immediately. More to the point, TMY have been trying for several years to pump just a few thousand barrels a day and failing. The geology is apparently quite challenging, and consequently, it seems likely that the field may not have been economic back in the days of $10 and $20 oil.TMY need to produce at least 4000 bpd to breakeven on operations, and 6000-to-8000 bpd to be able to service their considerable debt and continue their drilling program. (They have developed only 8% of their proven reserves, so drilling more holes is most definitely a necessity.) In 2005, the only produced 1100 bpd, but as most of that was being sold to the Kazakhstani government at $8/barrel, investors did not fret much over the lost production. We are expecting production for 2006 to at least double to north of 2000 bpd, and for income to improve even more with a significant portion of that production now reaching the world market (we will know for sure when TMY release their 4Q06 results in March).But 2007 could be the year that Transmeridian achieve a breakthrough. There are currently a record six drilling rigs either creating new holes or (hopefully) improving production from existing wells. We anticipate that production should attain 4000 bdp by the end of 1Q07, and exceed that level in 2Q07. In addition, we expect in 2007 that the company should be able to transport their oil via pipeline instead of truck/rail, thus cutting expenses, and that with the completion of their storage facility by mid-year, they should be able to sell all production on the world market (lack of storage forced them to sell a significant proportion into the local market at steep discounts in 2006). If they can ratchet production up to the 6000-to-8000 bpd range, they should be able to service their debt and afford additional drilling without the need to raise additional capital (which would require issuing more stock thus diluting the value of the stock already out there, obviously an undesirable result for current shareholders).
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bhessel (92.59) Submitted: 11/28/07 9:19 AM
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6 Mar 07 update:Transmeridian (TMY) issued an update today ( http://biz.yahoo.com/pz/070306/115005.html ) and the news was…well lukewarm. The best news is that the company has achieved 5100 bpd of production, which exceed our target of 4000 bpd in 1Q07. Unfortunately, it is not yet clear whether that level of production is sustainable, as the average production in January was 3700 bpd and in February it actually declined to 3500 bpd. (According to the press release, “production was curtailed during the last two weeks of February due to storage capacity limits and other technical issues related to the startup of pipeline deliveries”). Still, compared to a 2006 estimated average of 2200 bpd, the vector looks good. But not great, given that we need 4000 bpd just to sustain ongoing operations and to service the debt and pay for the additional drilling needed to access the remaining 92% of the company’s proven reserves, we need 6000-to-8000 bpd.There was also drilling news, and it too was good but not great. The first horizontal drilling project is complete: a workover of a marginal well SA-5H, which previously had been producing a measly 100 bpd. After acid stimulation—deemed only partially effective due to not having equipment optimal for acid stimulation of lateral horizontal wells—the workover project boosted production here tenfold to 1000 bpd. Decent enough…if it holds at that level. If past experience is any guide, there will probably be some dropoff. Two other wells were completed and put into production in early February and two more are nearing completion. TMY plan to drill and complete four more wells in 2007, for a total of eight.Finally, there was unmitigated good news on the pipeline front: TMY are now delivering oil to market via the nearby KazTransOil pipeline system utilizing third-party processing facilities at the Alibekmola field with a capacity of 4500 bpd, increasable to 9000 bpd. Management expect to switch over to their own treating and pipeline delivery system by late summer of 2007 (initial capacity of 15000 bpd). In either case, the end of the truck-to-train delivery chain should improve the bottom line starting this quarter.Overall, The Street was decidedly underwhelmed by this news, which was released just after 1pm. The stock was down 13% today on heavy volume. Still, at $3.46 it is north of where we bought in and the potential upside here is still very high. So we are standing pat.
6 Mar 07 update:
Transmeridian (TMY) issued an update today ( http://biz.yahoo.com/pz/070306/115005.html ) and the news was…well lukewarm. The best news is that the company has achieved 5100 bpd of production, which exceed our target of 4000 bpd in 1Q07. Unfortunately, it is not yet clear whether that level of production is sustainable, as the average production in January was 3700 bpd and in February it actually declined to 3500 bpd. (According to the press release, “production was curtailed during the last two weeks of February due to storage capacity limits and other technical issues related to the startup of pipeline deliveries”). Still, compared to a 2006 estimated average of 2200 bpd, the vector looks good. But not great, given that we need 4000 bpd just to sustain ongoing operations and to service the debt and pay for the additional drilling needed to access the remaining 92% of the company’s proven reserves, we need 6000-to-8000 bpd.
There was also drilling news, and it too was good but not great. The first horizontal drilling project is complete: a workover of a marginal well SA-5H, which previously had been producing a measly 100 bpd. After acid stimulation—deemed only partially effective due to not having equipment optimal for acid stimulation of lateral horizontal wells—the workover project boosted production here tenfold to 1000 bpd. Decent enough…if it holds at that level. If past experience is any guide, there will probably be some dropoff. Two other wells were completed and put into production in early February and two more are nearing completion. TMY plan to drill and complete four more wells in 2007, for a total of eight.
Finally, there was unmitigated good news on the pipeline front: TMY are now delivering oil to market via the nearby KazTransOil pipeline system utilizing third-party processing facilities at the Alibekmola field with a capacity of 4500 bpd, increasable to 9000 bpd. Management expect to switch over to their own treating and pipeline delivery system by late summer of 2007 (initial capacity of 15000 bpd). In either case, the end of the truck-to-train delivery chain should improve the bottom line starting this quarter.
Overall, The Street was decidedly underwhelmed by this news, which was released just after 1pm. The stock was down 13% today on heavy volume. Still, at $3.46 it is north of where we bought in and the potential upside here is still very high. So we are standing pat.
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bhessel (92.59) Submitted: 11/28/07 10:27 AM
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15 Mar 07 update:Transmeridian (TMY) held their 4Q04 and year end results conference call this morning. The results themselves were an anticlimax…we already knew they spent a lot more money than they brought in in 2006 as they focused on infrastructure to enable them to wring some production out of their first class properties in Kazakhstan. The actual numbers (announced yesterday) showed a near-doubling of production over 2005 (from 1100 bpd to 2000 bpd) and tripling of revenues, but the gain was more than offset by increased operations expenses and at the end of the day, TMY lost $54.3MM in 2006 as compared with $21.6MM in 2005. No surprizes there.But what we really wanted to hear was their progress on ramping up production. This is a critical issue because the company had enough cash to last through the first quarter at their current (aggressive) level of CAPEX/production enhancement spending. Transmeridian needs about 4000 bpd of production just to keep the lights on, 6500 bpd to maintain a modest CAPEX program reworking existing wells and drilling a handful of new ones, and 8000 bpd of production to be comfortable.Well, the bad news is that they aren’t going to make it. Company management stated that current production is running around 4000 bpd, which is better than the numbers in February or January, but disappointingly down from just a week ago (5100 bpd as of 6 March).So, with only $15MM cash on hand—most of which is earmarked for a looming interest payment—the other bad news is that management have no choice but to throw in the towel and seek an additional $15MM-to-$22MM in equity-funded cash, which means more dilution for the likes of us existing shareholders. So what’s the good news? Well…they completed their first horizontal-lateral well, and management believe that this approach will prove the key to unlocking their reserves, which flow freely through a series of fractures…the theory is that digging vertical wells is dicey because it is easy to miss or only tangentially plug into the fractures but horizontal-lateral drilling is much more likely to intersect fractures, potentially at multiple points and this is a better approach for getting more oil out of the ground. Unfortunately, this first horizontal well started out strong at 1000 bpd but (as predicted here earlier this month) has lapsed down to 400 bpd now. Management believe but are not certain that acid stimulation deployed in this new well failed to make it into the lateral drilled region but was confined to the original vertical area, and that once they deliver acid stimulation to the lateral areas of this and subsequent wells, it will help with the efforts to tap into the fractures and boost production. Perhaps it would be more accurate to say that these are “good expectations” rather than “good news.”Another good expectation is that with the new wells being drilled now plus the reworking of existing wells also underway, management project reaching 8000 bpd of production by mid-May. By then they also expect to be selling nearly 100% of their output on the international market—the figure in 2006 was 57%—which provides a better price than the Kazakhstan domestic market. They also appear to be near completion on their pipeline infrastructure project, which should provide them with the capacity to move up to 30000 bpd more economically. This projected combo of higher production, better prices, and lower costs should not only make Transmeridian self-funding, but push it into the black.The stock surged today, up as high as $3.74 before closing at $3.02, up 4%. But it was not in reaction to this sunny scenario, which has been described before (and indeed was supposed to have arrived already). The surge was in set off by management’s announcement prior to the open that they were “considering strategic alternatives” due to disappointment with the market valuation of the company and a desire to maximize shareholder value. Management stated that there have been inquiries and that non-disclosure agreements have been signed and that they are providing corporate data to interested third parties. They stated they would be open to any alternatives, from partnership to partial sale of the South Alibek field to a buyout.If management truly believe they are two months away from black ink (following years of ever-increasing losses), the timing for solciting bids seems curious. Wouldn’t it make more sense to wait a few weeks and then deal from a position of greater strength? It is likely that this is primarily a tactical manuever designed to pump up the value of the stock in order to obtain a better deal on their forthcoming funding deal. (The bears might say that management have concluded that cracking the complex geography of the South Alibek field is beyond their limited means and they genuinely want out.)In any event, we are hanging on here to allow management the rope they say they need to get to 8000 bpd. The prospect of a profitable E&P sitting on 67MMBBLS of proved (down from last year’s estimate of 73MMBBLS, another little disappointment) and 140MMBBLS of probable reserves is too good to give up on this close to potential fruition. We will, however, be watching closely to ensure that management achieve their goal of producing sufficient crude at a low enough price to both fund their CAPEX and show a profit. Failing that, we should be looking for a buyout, here, too - not the sort requiring the buyers to sign NDAs.
15 Mar 07 update:
Transmeridian (TMY) held their 4Q04 and year end results conference call this morning. The results themselves were an anticlimax…we already knew they spent a lot more money than they brought in in 2006 as they focused on infrastructure to enable them to wring some production out of their first class properties in Kazakhstan. The actual numbers (announced yesterday) showed a near-doubling of production over 2005 (from 1100 bpd to 2000 bpd) and tripling of revenues, but the gain was more than offset by increased operations expenses and at the end of the day, TMY lost $54.3MM in 2006 as compared with $21.6MM in 2005. No surprizes there.
But what we really wanted to hear was their progress on ramping up production. This is a critical issue because the company had enough cash to last through the first quarter at their current (aggressive) level of CAPEX/production enhancement spending. Transmeridian needs about 4000 bpd of production just to keep the lights on, 6500 bpd to maintain a modest CAPEX program reworking existing wells and drilling a handful of new ones, and 8000 bpd of production to be comfortable.
Well, the bad news is that they aren’t going to make it. Company management stated that current production is running around 4000 bpd, which is better than the numbers in February or January, but disappointingly down from just a week ago (5100 bpd as of 6 March).
So, with only $15MM cash on hand—most of which is earmarked for a looming interest payment—the other bad news is that management have no choice but to throw in the towel and seek an additional $15MM-to-$22MM in equity-funded cash, which means more dilution for the likes of us existing shareholders.
So what’s the good news? Well…they completed their first horizontal-lateral well, and management believe that this approach will prove the key to unlocking their reserves, which flow freely through a series of fractures…the theory is that digging vertical wells is dicey because it is easy to miss or only tangentially plug into the fractures but horizontal-lateral drilling is much more likely to intersect fractures, potentially at multiple points and this is a better approach for getting more oil out of the ground. Unfortunately, this first horizontal well started out strong at 1000 bpd but (as predicted here earlier this month) has lapsed down to 400 bpd now. Management believe but are not certain that acid stimulation deployed in this new well failed to make it into the lateral drilled region but was confined to the original vertical area, and that once they deliver acid stimulation to the lateral areas of this and subsequent wells, it will help with the efforts to tap into the fractures and boost production. Perhaps it would be more accurate to say that these are “good expectations” rather than “good news.”
Another good expectation is that with the new wells being drilled now plus the reworking of existing wells also underway, management project reaching 8000 bpd of production by mid-May. By then they also expect to be selling nearly 100% of their output on the international market—the figure in 2006 was 57%—which provides a better price than the Kazakhstan domestic market. They also appear to be near completion on their pipeline infrastructure project, which should provide them with the capacity to move up to 30000 bpd more economically. This projected combo of higher production, better prices, and lower costs should not only make Transmeridian self-funding, but push it into the black.
The stock surged today, up as high as $3.74 before closing at $3.02, up 4%. But it was not in reaction to this sunny scenario, which has been described before (and indeed was supposed to have arrived already). The surge was in set off by management’s announcement prior to the open that they were “considering strategic alternatives” due to disappointment with the market valuation of the company and a desire to maximize shareholder value. Management stated that there have been inquiries and that non-disclosure agreements have been signed and that they are providing corporate data to interested third parties. They stated they would be open to any alternatives, from partnership to partial sale of the South Alibek field to a buyout.
If management truly believe they are two months away from black ink (following years of ever-increasing losses), the timing for solciting bids seems curious. Wouldn’t it make more sense to wait a few weeks and then deal from a position of greater strength? It is likely that this is primarily a tactical manuever designed to pump up the value of the stock in order to obtain a better deal on their forthcoming funding deal. (The bears might say that management have concluded that cracking the complex geography of the South Alibek field is beyond their limited means and they genuinely want out.)
In any event, we are hanging on here to allow management the rope they say they need to get to 8000 bpd. The prospect of a profitable E&P sitting on 67MMBBLS of proved (down from last year’s estimate of 73MMBBLS, another little disappointment) and 140MMBBLS of probable reserves is too good to give up on this close to potential fruition. We will, however, be watching closely to ensure that management achieve their goal of producing sufficient crude at a low enough price to both fund their CAPEX and show a profit. Failing that, we should be looking for a buyout, here, too - not the sort requiring the buyers to sign NDAs.
bhessel (92.59) Submitted: 11/28/07 10:31 AM
11 May updateTransmeridian (TMY) announced their 1Q07 results yesterday ( http://biz.yahoo.com/pz/070510/119364.html ) after the close of the market and there was no joy in Mudville. Average daily production for the quarter was a record 3500 bpd of oil but expenses rose even faster and while the production numbers approached what management had targeted as their breakeven threshold of 4000 bpd, the red ink surged year-over-year from $12.7MM in 1Q06 to $15.5MM this year. And while the volume of sales were up, the average price per barrel actually declined from $30.05 in 1Q06 to $28.19 in 1Q07.This investment is not looking good but the spec port overall is doing well enough here that we can afford to cut TMY management some slack given the still huge potential upside if they can get their production issues solved. Let’s see how the second quarter goes.
11 May update
Transmeridian (TMY) announced their 1Q07 results yesterday ( http://biz.yahoo.com/pz/070510/119364.html ) after the close of the market and there was no joy in Mudville. Average daily production for the quarter was a record 3500 bpd of oil but expenses rose even faster and while the production numbers approached what management had targeted as their breakeven threshold of 4000 bpd, the red ink surged year-over-year from $12.7MM in 1Q06 to $15.5MM this year. And while the volume of sales were up, the average price per barrel actually declined from $30.05 in 1Q06 to $28.19 in 1Q07.
This investment is not looking good but the spec port overall is doing well enough here that we can afford to cut TMY management some slack given the still huge potential upside if they can get their production issues solved. Let’s see how the second quarter goes.
bhessel (92.59) Submitted: 11/28/07 12:16 PM
10 Aug 07 update:The beat(ing) goes on…Transmeridian (TMY) management must be so depressed by their present situation—production from their South Alibek field, spotty at the best of times, indefinitely shut down by the Kazakhstani government over a gas flaring issue—that they did not bother to issue a press release announcing their 2Q07 results, nor hold a conference call for analysts and investors. They did post the information on the SEC’s EDGAR system yesterday (as required for a public company), and the numbers were not cheering. Production, while up y-o-y from 2Q06’s 1450 bpd to 2450 bpd in 2Q07 marked a steep decline from 1Q07 (3500 bpd). and so the company fell far short of the minimum target of 4000 bpd needed to break even on pumping operations, to say nothing of the 6500-to-8000 bpd needed to fund the debt service and continued drilling operations.The one piece of good news is that revenue was up sharply in 2Q07 due to a record $51.27 average price per barrel; the company benefited both from higher world market prices and from delivering oil via pipeline and thus ducking the cost of truck/train transport which previously was deducted from the price of each barrel. Alas, the production curtailment which was announced 29 June has extended far beyond the company’s original estimate of two weeks. Management believe they have reached an agreement in principle but the process for getting the agreement approved by the right Kazakhstani government officials remains murky and in the meantime, there is no production.As speculated here previously, could be the government intends to grease the skids here for Transmeridian. At this point, we believe that management will be forced to sell out to a better-capitalized buyer who can afford to invest in the infrastructure needed to obtain economic levels of output from the South Alibek field. We continue to believe that oil is present there, and expect that a buyer will pay more than the depressed $1.84/share the stock is going for now. So we are stubbornly holding on here.
10 Aug 07 update:
The beat(ing) goes on…Transmeridian (TMY) management must be so depressed by their present situation—production from their South Alibek field, spotty at the best of times, indefinitely shut down by the Kazakhstani government over a gas flaring issue—that they did not bother to issue a press release announcing their 2Q07 results, nor hold a conference call for analysts and investors. They did post the information on the SEC’s EDGAR system yesterday (as required for a public company), and the numbers were not cheering. Production, while up y-o-y from 2Q06’s 1450 bpd to 2450 bpd in 2Q07 marked a steep decline from 1Q07 (3500 bpd). and so the company fell far short of the minimum target of 4000 bpd needed to break even on pumping operations, to say nothing of the 6500-to-8000 bpd needed to fund the debt service and continued drilling operations.
The one piece of good news is that revenue was up sharply in 2Q07 due to a record $51.27 average price per barrel; the company benefited both from higher world market prices and from delivering oil via pipeline and thus ducking the cost of truck/train transport which previously was deducted from the price of each barrel. Alas, the production curtailment which was announced 29 June has extended far beyond the company’s original estimate of two weeks. Management believe they have reached an agreement in principle but the process for getting the agreement approved by the right Kazakhstani government officials remains murky and in the meantime, there is no production.
As speculated here previously, could be the government intends to grease the skids here for Transmeridian. At this point, we believe that management will be forced to sell out to a better-capitalized buyer who can afford to invest in the infrastructure needed to obtain economic levels of output from the South Alibek field. We continue to believe that oil is present there, and expect that a buyer will pay more than the depressed $1.84/share the stock is going for now. So we are stubbornly holding on here.
cubanstockpicker (78.64) Submitted: 12/14/07 11:35 AM
They already cleared the pipeline gas flaring problem with the local government as noted in their later filings. All their permits are inline and now have multiple buyout bids.
bhessel (92.59) Submitted: 12/31/07 9:58 AM
3 Oct 07 updateTransmeridian (TMY) management announced this morning that production of oil from their South Alibek field has resumed, all approvals from the Kazakhstani government with respect to their revised gas flaring allowances having been obtained. The production curtailment lasted about three months.Hopefully the resumption of production will enable the company to cut their operating losses and by removing one uncertainty, facilitate a sale of the South Alibek license, which management are now soliciting.
3 Oct 07 update
Transmeridian (TMY) management announced this morning that production of oil from their South Alibek field has resumed, all approvals from the Kazakhstani government with respect to their revised gas flaring allowances having been obtained. The production curtailment lasted about three months.
Hopefully the resumption of production will enable the company to cut their operating losses and by removing one uncertainty, facilitate a sale of the South Alibek license, which management are now soliciting.
bhessel (92.59) Submitted: 12/31/07 10:05 AM
1 Nov updateSome good news and some potential good news on the Transmeridian Exploration (TMY) front for a change.The good news is that the company have further resolved the gas flaring issue at their South Alibek field with the government of Kazakhstan: as announced a month ago, production has resumed after a three-month shutdown, but last week, management announced an agreement on gas flaring levels through 2008 that will afford them considerable flexibility in bringing new wells into production. TMY CEO Lorrie Olivier stated “The approval for associated gas flaring volumes provides continuity in the implementation of our operational strategies and should preclude any further disruption in production…. Our current production levels and the rationalization of surplus stock and non strategic Kazakhstan assets should allow us to meet all of our current operating needs, and with the resumption of development work and resulting new production, we expect to ease further cash demands….” Hopefully, this means no need for additional dilution to raise cash.The potential good news is that the company has received bids from interested buyers (plural!) and that negotiations are now in progress. Maybe we will yet get bailed out of this (so far) bad bet.http://biz.yahoo.com/pz/071022/129306.html http://biz.yahoo.com/pz/071101/130356.html
1 Nov update
Some good news and some potential good news on the Transmeridian Exploration (TMY) front for a change.
The good news is that the company have further resolved the gas flaring issue at their South Alibek field with the government of Kazakhstan: as announced a month ago, production has resumed after a three-month shutdown, but last week, management announced an agreement on gas flaring levels through 2008 that will afford them considerable flexibility in bringing new wells into production. TMY CEO Lorrie Olivier stated “The approval for associated gas flaring volumes provides continuity in the implementation of our operational strategies and should preclude any further disruption in production…. Our current production levels and the rationalization of surplus stock and non strategic Kazakhstan assets should allow us to meet all of our current operating needs, and with the resumption of development work and resulting new production, we expect to ease further cash demands….” Hopefully, this means no need for additional dilution to raise cash.
The potential good news is that the company has received bids from interested buyers (plural!) and that negotiations are now in progress. Maybe we will yet get bailed out of this (so far) bad bet.
bhessel (92.59) Submitted: 12/31/07 10:10 AM
11 Nov 07 updateTransmeridian (TMY) had a second consecutive “stealth” release ( http://biz.yahoo.com/e/071109/tmy10-q.html ) of their quarterly results Friday, choosing again to forgo not only a conference call with analysts and investors but even a press release. And why not, with literally almost nothing to report, in the sense that with production from the company’s South Alibek field in Kazahkstan shut down for the entire three months, only a piddle of barrels of oil from inventory were sold (111/day) in the quarter. (Guess you know you have a dog of a stock when management get in the habit of burying news update after news update on Friday afternoons following the close of the market for the week, obviously counting on the weekend, if not to cause investors to forget the info, at least not to be able to sell instantly upon learning of it.) Production for the first nine months of the year are now averaging 2200 bpd, which is far short of the minimum 4000 bpd needed for the company to sustain operations on a cash neutral basis, to say nothing of the 2007 target of 6500-to-8000 bpd the company hoped to produce in order to be able to service their debt and fund development drilling.But that was then and now the focus is on management’s efforts to sell the company, or at least the South Alibek field license. No new news on that front (and thus another incentive to eschew a conference call).The two slivers of good news were that international sales of oil went off at a record $66.48/barrel, and even with this dead quarter, production for the first nine months of the year overall is still running 24% ahead of last year. Course, that says more about the company’s pathetic 2006 performance than about 2007.Anyway, we TMY shareholders continue to wait for Godot here, hoping against hope that when he arrives he won’t have blown his paycheck on wine or philosophy books but never-the-less will be in a buying mood, and ideally in the market for oil to go with his surfeit of vinegar.
11 Nov 07 update
Transmeridian (TMY) had a second consecutive “stealth” release ( http://biz.yahoo.com/e/071109/tmy10-q.html ) of their quarterly results Friday, choosing again to forgo not only a conference call with analysts and investors but even a press release. And why not, with literally almost nothing to report, in the sense that with production from the company’s South Alibek field in Kazahkstan shut down for the entire three months, only a piddle of barrels of oil from inventory were sold (111/day) in the quarter. (Guess you know you have a dog of a stock when management get in the habit of burying news update after news update on Friday afternoons following the close of the market for the week, obviously counting on the weekend, if not to cause investors to forget the info, at least not to be able to sell instantly upon learning of it.) Production for the first nine months of the year are now averaging 2200 bpd, which is far short of the minimum 4000 bpd needed for the company to sustain operations on a cash neutral basis, to say nothing of the 2007 target of 6500-to-8000 bpd the company hoped to produce in order to be able to service their debt and fund development drilling.
But that was then and now the focus is on management’s efforts to sell the company, or at least the South Alibek field license. No new news on that front (and thus another incentive to eschew a conference call).
The two slivers of good news were that international sales of oil went off at a record $66.48/barrel, and even with this dead quarter, production for the first nine months of the year overall is still running 24% ahead of last year. Course, that says more about the company’s pathetic 2006 performance than about 2007.
Anyway, we TMY shareholders continue to wait for Godot here, hoping against hope that when he arrives he won’t have blown his paycheck on wine or philosophy books but never-the-less will be in a buying mood, and ideally in the market for oil to go with his surfeit of vinegar.
bhessel (92.59) Submitted: 12/31/07 10:13 AM
Happy New Year!Transmeridian (TMY)—our E&P with a potentially world-class property in Kazakhstan that have been suffering with production issues and soliciting takeover bids—announced today that having failed to receive any offers they deem worthy, management have raised their own war chest and are bidding to take the company private at $3/share. CEO Lorrie T. Olivier has formed an investment vehicle, Trans Meridian International, Inc. (“TMI”) to make the all-cash offer for the purpose of acquring “as many outstanding shares as possible of the Company’s common stock as a first step in a ‘going private’ transaction resulting in TMI acquiring the entire equity interest in the Company. If the transaction is completed, TMI contemplates that the shares of the Company’s common stock would be delisted from trading on the AMEX and deregistered with the Securities and Exchange Commission,” according to the press release ( http://biz.yahoo.com/pz/071231/133621.html ). Our take is that TMY management have lined up adequate financing here and that this offer is virtually money in the bank. We think the rights to the South Alibek field are a steal at $825MM. (Naturally we do, considering we paid the equivalent of 10% more than that for our shares. And of course now we regret not buying more at $1.40 last week. LOL) Accordingly, we plan to play through on this one and hold our shares to see if this tree-shanking exercise causes any serious counter-offers to drop down to the ground.
Happy New Year!
Transmeridian (TMY)—our E&P with a potentially world-class property in Kazakhstan that have been suffering with production issues and soliciting takeover bids—announced today that having failed to receive any offers they deem worthy, management have raised their own war chest and are bidding to take the company private at $3/share. CEO Lorrie T. Olivier has formed an investment vehicle, Trans Meridian International, Inc. (“TMI”) to make the all-cash offer for the purpose of acquring “as many outstanding shares as possible of the Company’s common stock as a first step in a ‘going private’ transaction resulting in TMI acquiring the entire equity interest in the Company. If the transaction is completed, TMI contemplates that the shares of the Company’s common stock would be delisted from trading on the AMEX and deregistered with the Securities and Exchange Commission,” according to the press release ( http://biz.yahoo.com/pz/071231/133621.html ).
Our take is that TMY management have lined up adequate financing here and that this offer is virtually money in the bank. We think the rights to the South Alibek field are a steal at $825MM. (Naturally we do, considering we paid the equivalent of 10% more than that for our shares. And of course now we regret not buying more at $1.40 last week. LOL) Accordingly, we plan to play through on this one and hold our shares to see if this tree-shanking exercise causes any serious counter-offers to drop down to the ground.
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