Connacher Oil and Gas

from the other board poster.Now that there is no news since a couple of weeks sentiment is weakening on CLL.It's clear the company needs to bring out a plan on how they will going forwards.But if a big drop on bitumen price should occur again it's clear CLL is in trouble.If prices stay stable then it's also not clear how they could expand the company because they have not the financial tools for that.Is CLL if they should search for a buyer attractive in it's current from cfr a refianary ,a conventional asset and the oil sands plants.I'm also wondering if GS is even concerned about the shareholders.They have not such a good reputation.

here is the posting

It is certainly a guessing game. I will stray from my straight technical analysis point of view since at time I used to own this stock and some other oilsands players and followed it quite closely. These are certainly opinions, largely based upon past acitivies of the company, and the markets reaction to them.

1- when the unknown offer was spurned, it appeared as if there was a rift in management and those not buying the DG line were let go. What is interesting about the executives who were let go was some of them were only recently promoted into those positions of responsibility. It did not make sense to promote them only to let them go and replacing them so it became obvious there had been a rift of sorts in management.

2-More importantly, DG felt there was not enough value in the offer and was moving ahead and not courting any suitors or encouraging any to come forward. However, there must have been a Night of the Long Knives in the board room because he was soon following his former executives out the door which can mean any number of things and again, like other opinions here, it is purely speculation but being around boardrooms, you begin to get a sense of the way these things pan out. It could have been felt by those dissenting directors who ousted DG that the company was on a slippery slope financially with much of the cash on hand already allocated to pay of the coming debt interest due in June. Coupled with the fact they were planning on expanding the refinery in Montana and bought the property next door to it was an indication there was going to be a need moving forward to finance the expansion. No company would have purchased the land with a view to expanding the facility simply with the idea of selling it off. They would have let the new owners take those steps so DG was moving ahead and staying the course as an integrated oil and gas player. The selling off of non-core assets helped to raise funds which would go towards the debt payments in June. This would illustrate all assets for the most part are pledged to debt and short of another share dilution, it may not have been clear or acceptable to the board how the expansion of the refinery and the stepping up of production was going to be paid for. The company already was saddled with tremendous debt and no matter the current or future price of oil, CLL has been a debt monster since 2005.

3-Knowing the true financial picture and knowing DG would be opposed to seeing his baby sold off and thrown out with the bathwater, the board stepped in and is currently calculating its fixed and non-fixed assets with a view to a true valuation, minus the debt, and the beginning of finding a suitor. The board realizes the company is only steps away from a disaster if the price of oil falls. The Luke Energy play was a disaster as they paid for the company at the top of the trading range and NG is pretty much a plentiful and low value commodity trading nowhere nears its 6 x price of oil, pretty much leaving that traditional measurement in the dust. They had no intention of using Luke gas in the great divide so they are selling a commodity they paid a great deal for at bargain basement rates. The debt on their warrants is high, the interest rate being the best they could do given they were maxed out and in order to carry more debt you have to pay the piper and almost paid junk bond prices for the loan.

Knowing all of this the BOD stepped in and removed the one obstacle to succession and to courting a buyer. Remember, the share price has little to do with anything, the share price is simply market sentiment at any given moment in time and a company making money can have a low share price for any number of reasons. The share price of CLL is where it is at because of the past performance and the failure to perform of the company. This stock had its highest close of 6.07 and a low of .23 since 2005 and a current price under a dollar. No matter what this company did, or DG did, it dissapointed investors. Once the share dilution began, the major players moved on and it became a retail trade, daytrade darling until it finally became obvious there was little investor interest in it, volume dried up, and it was a pale shadow of its former self. Current management will attempt to put some lipstick on this and get as much for it as they can and be rid of it. The more this emporer crowed, the more institutional investors realised the emporer was naked. From CEO of the year to being given the boot DG has seen the highs and lows of the markets.

Whether this sells for 1.50 or 2.00 or .75 remains to be seen. One thing is for sure the company cannot continue to build debt, thus limiting its ability to fund infrastructure and growth which may in the short term be the major determining factor as to the final bid price if any suitor comes forward. Wolves being wolves, sometimes they will just wait for the weak to expire and go in and pick up the pieces. I get the feeling there is no urgency currently and the market may be willing to wait to see how much life is in this company.