Nothing Left But The Slick

Apr 17th, 2009 – Comment

Hi Lou,I have a few bucks on OILEXCO,do you think it is a goner or will it scrape by? Jack Hi Jack, I don’t like being a dream crusher but even if a white night were to come charging over the horizon to save Oilexco ( OIL TSXV) I don’t think there would be much they […]


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Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


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Hi Lou,I have a few bucks on OILEXCO,do you think it is a goner or will it scrape by?

Jack

Hi Jack,

I don’t like being a dream crusher but even if a white night were to come charging over the horizon to save Oilexco ( OIL TSXV) I don’t think there would be much they could do to create value for existing shareholders.

The company is under creditor protection in the UK and Premier Oil Plc is said to be readying an offer for their North Sea assets. Once those assets are sold there will not be much meat left over on the bone to pick over. My research indicates that with just over $40M in cash the company could limp along till Late 2009.

The Oilexco story is one of getting sideswiped by a lender. When the Royal Bank of Scotland hit the skids it called in its loans and given market conditions the company couldn’t find another lender to step up to the plate. A sad tale but one that we can learn from.

The chart clearly shows that there were many opportunities to preserve capital. You don’t have to ride a stock to zero. Make capital preservation a top priority going forward.

Happy Capitalism!

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