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End of the line for Renegade Petroleum

The once-ambitious dividend paying junior taps out

When he was younger, Max Fawcett wanted to make a mint in the markets. Now as the managing editor of Alberta Venture he gets to write about them. Close enough, right? He can be reached at mfawcett@albertaventure.com

Feb 12, 2014

by Max Fawcett

Well, so much for that. After a tumultuous run as a junior, divided paying oil and gas company, one that culminated in a proxy fight with an American hedge fund (one run by Rick George’s son Zachary) that was aborted at the last minute, Renegade Petroleum (TSXV:RPL) is welcoming a friendly offer worth $495 million from Alexander Energy (TSXV:ALX). Alexander is the company the management team behind Spartan Oil and Spartan Exploration recapitalized in December, with the intention of renaming it – yes, you guessed it – Spartan Energy. Long-suffering Renegade shareholders – at least, the ones who’ve hung around this long – have seen a nearly 50 per cent bump in the value of their shares over the last few days. Of course, if they bought it at this time last year, they’re still down a fair chunk of change.

The CEO of Spartan – well, Alexander, for now – says the deal will put the company on track to becoming a player in the intermediate space. “This transaction will establish a significant presence for Spartan in southeast Saskatchewan and will position the company for continued growth and success,” Rick McHardy told the Calgary Herald. “This is the second high quality acquisition since the recapitalization of Alexander just two months ago, and a key strategic step in our growth towards becoming an oil-focused intermediate producer in the coming years.”

And if ex-Renegade shareholders are looking for somewhere new to put their money, AltaCorp’s Jeremy McCrea still says Bonterra Energy (TSE:BNE) is an excellent choice. “With a sizeable and highly profitable resource play (Cardium), a healthy balance sheet, and an experienced, invested management team, we believe Bonterra will continue to be one of the better-performing yield names (risk adjusted) for the foreseeable future,” he wrote in a note today. “What puts Bonterra on our ‘top pick list (for yield)’ are recent IP rates on the company’s 1.5 mile horizontal wells that have shown IP rates averaging approximately 200 boe/d (which have remained flat at this level over a nine-month period). As management drills further 1.5-mile wells throughout its Carnwood pool at Pembina we should see a very meaningful step-change in guidance (which only assumes a 100 boe/d average rate for the year). This should result in upward revisions to CFPS and PPS (and ultimately another sizeable dividend bump).” He has an outperform rating and $65 price target on its shares.

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