I have been adding more Canadian oil junior positions.
If you recall, I started my endeavor into the domestic oils a month and a half ago, when I purchased Lightstream Energy and Penn West. That didn’t last long; I quickly jettisoned those names after doing more research, deciding that neither was particularly cheap, and recognizing that there were other, smaller names that were more attractive.
The first names I went with was Novus Energy and that was followed by Longview Exploration, and Rock Energy. Of the three I felt the most comfortable with Novus and made that position the largest. This week, an article came out in a Hong Kong paper (I believe if was the Economic Times) that Novus was about to be taken out by a Chinese company called Yanchang Petroleum (you can access the translated article here, and one version of the original here). The news was clearly leaked, Novus wasn’t ready for it to be released, and the stock has remained halted for the last 3 days.
If the article is to be believed, the value of the transaction is going to be a windfall for shareholders. According to the article the purchase price is $500 million, which after subtracting debt and accounting for stock options would still mean over $2 per share. Given that Novus is an 8% position for me, this would be a huge gain. Read more