Lone Pine Resources

Discussion in 'Stocks' started by billyjoerob, Aug 26, 2012.

  1. Lone Pine Resources is a 2011 IPO that's been annihilated.


    I like to follow IPOs because when they break, they really break. There is no support below and every holder has a loss, so selling can be extreme. That appears to be the case here. Here's how it adds up, roughly:

    $600mm of easily valued oil producing assets
    + Zero to $400mm of nat gas acreage in Alberta and Quebec
    - $388mm debt
    = $200mm - $600mm of value/85mm shares

    In other words, this is conservatively worth at least $2.50. Stock is down at $1.18, could be a double in a few weeks as they sell off some acreage and reduce the debt.
  2. Lone Pine was spun off from Forest Oil which is an absolute trainwreck itself, it's not high profile like Chesapeake Energy, that's a risky bet.

    Chesapeake is only on the up and up because of McLendon's land picking prowess and Icahn shaking up the board, to sell off some of McLendon's prime real estate.

    I'm not sure if Lone Pine has much prime real estate but be careful on that one.
  3. I looked at Forest. They backed themselves into a corner with too much debt as gas prices declined, but the debt itself doesn't trade higher than 8%. FST might not be a bad pick up here, but not as favorable as LPR.
  4. Gap between $1.50 and $2.15. Smooth sailing and good looking chart.