Imperial Petroleum, Inc. (fka IPMN)

[10 bagger]

10 bagger Share Wednesday, December 07, 2011 10:22:01 PM
Re: 10 bagger post# 3767 Post # of 4074

IPMN.. $0.58 The rest of the story.. Could this be why IPMN is under pressure lately..???

Cross Post.. Cross Post.. Posted By cleverrox


IPMN - Will they go out of business in 2012 when there is no biodiesel subsidy? In the risks section they indicate that as a possibility and then go on to contradict it later on.

Congress did not enact any legislation to extend this tax credit beyond December 31, 2009 and it expired at that time. In December 2009, the United States House of Representatives passed a bill extending this credit to December 31, 2010. On March 10, 2010, the United States Senate passed a similar bill as part of the American Workers, State and Business Relief Act, H.R. 4213. In addition to extending the credit to December 31, 2011, both bills retroactively apply the credit to the beginning of 2010. If the tax credit is not renewed, our biodiesel sales prices will likely decrease by $1.00 per gallon. If biodiesel feedstock costs do not decrease significantly relative to biodiesel prices, we will realize a negative gross margin on biodiesel. As a result, we would cease producing biodiesel, which could have an adverse effect on our financial condition.

I read the following in the MD&A:

Government incentives significantly affect the price of biodiesel in the market, as discussed above. Currently the Blender’s Credit ($1.00/gallon tax credit received by parties that blend B100 with petroleum diesel) is set to expire at the end of calendar 2011. While the Company generally does not receive this credit, indirectly, the subsidy has an impact on overall biodiesel prices and their relation to petroleum diesel prices. Previously in early 2010, when the Blender’s Tax Credit was allowed to expire, as a result of the mandated requirements imposed by RFS2, RIN values increased over a period of a few months and offset the impact to biodiesel prices by the loss of the credit. We would anticipate that a similar adjustment in RIN values would occur again, if the credit is allowed to expire. As a result, we would estimate that the short term impact to a loss of the Blender’s Tax Credit would be reduction in revenues over a three month period and would result in a reduction in annual revenues of about 7%. We believe net income would only be impacted during the adjustment period as RIN values increase and as a result we would estimate the impact to net income to be a reduction of approximately 1-2% for fiscal 2012.

A legislative change that eliminated the RFS2 incentives could have a material adverse effect on our biodiesel sales prices by reducing the price of biodiesel to an equivalent price for petroleum diesel and by eliminating the significant demand premium that biodiesel currently receives. We would estimate that if biodiesel prices were to decline to the current level of petroleum diesel prices and assuming that waste grease prices declined as well in accordance with historical data, our gross margins would be about $0.37/gallon. Our revenues would be decreased by about and 31% while net income would be reduced by about 46%.

[umiak]

Well that's funny, thought it was "the weather".

[oilguy1]

here is what is happening. The company says it is still working with the bank to come to an agreement. The profits were affected last quarter and probabaly will be this quarter also due to the blenders 1.00 per gallon rebate being eliminated by the government. The blenders obviously hoarded as much supply before yers end as they could knowing their rebate was being cut. As soon as that over supply is gone thru, then sales will increase again probably by spring when the trucking runs ramp up (seasonal). If they would onl6y get the oil sands oil flowing (which they say will start end of Feb. in the latest conference call) this would make up for any disruption of diesel revenue. The investor relations company seems to think the oil sands is not that big of a deal, but it is! Not having all your eggs in one basket eliminates market disruption due to over supply. !000 gals of oil per machine per day is huge. Hopefully Jeff will make a full recovery after treatment and return at least part time within several months. The bank is currently looking at projections for diesel. The company thinks the financing will happen though, and that the sale of the money sucking property in LA will happen soon.

[umiak]

that was a nice bounce, all you can do is manage your risk as best you can

[Traderfan]

Yes, recovered nicely so far. Are you invested?

[lovethatgreen]

stock only down 2%

[Traderfan]

Yes that was good for you that there was a nice rally lately. Wouldn't have been good if that news today came a few days ago at 30 cents per share.

[umiak]

No idea, moving on.

[umiak]

Share price in the last week was worth waiting for. And yes, I hate this stock lol.

[gistheman]

Me too. I have been wondering if the Wilson boys have been setting up to spin off Arrakis.

[Traderfan]

And once again the share price action was an indicator in the last few weeks. That makes it 2 out of 2 now in this stock.

[umiak]

yes, 20/20

[lovethatgreen]

nice trade from 30 to 50 for someone

[umiak]

CFO is acting, but I don't care. New CEO leaving was the last straw for me.

[lovethatgreen]

so they can refinance debt with no CEO?

hmmm

[umiak]

I sold, I'm guessing IR has it's head somewhere I don't want to be.

[budge]

it would appear that they have a problem. i think that some investors and traders might be anticipating a wells notice also.

[umiak]

Don't like the news....

[umiak]

Once again IR said(today) no dilution, they are working at rolling it with the bank. IR's sense on the sale of the ng segment is that it is beyond negotiating and attorneys are passing paper back and forth.

Revenues are expected to remain at about the current quarterly levels throughout fiscal 2012; resulting in a full year revenue increase of approximately 30%

“The quarter was one of transition from a Company with multiple businesses to a Company focused on biodiesel with a strong secondary interest in furthering our proprietary oil sands recovery technology, Arrakis Oil Recovery, LLC. Our biodiesel production is at capacity but we are already planning for an additional production platform in our current building that could increase our capacity, and revenues, by an additional 25%.”

http://finance.yahoo.com/news/Imperial-Petroleum-Inc-bw-474440049.html?x=0

[umiak]

Thank NOS I am waiting for the market to figure out these guys are still in business....

Revenues are expected to remain at about the current quarterly levels throughout fiscal 2012; resulting in a full year revenue increase of approximately 30%.

[umiak]

It all started with someone sucking up 100k shares at .30. Probably a combination of things.

[SwingKing]

Good Morning IPMN,

Word is getting out about the technical play here. The pinch is just opening up and our first target is the SAR at .52, after that I see .66 followed by .86. How fast we get there will all depend on volume and like I said buzz is building.

Check out the PPO and ADX pinch and if you look closely you can see they just started to really pull apart on the 19th. The red-green ADX crossover in nice also.

GL, I’m in at .32 and going to ride this to the 200day.

[gistheman]

Nice day(s). Alot of volume. No news. Something in the works?

[umiak]

I see possibilities, don't have a name for it:




Bottom line for me, this is a 3-6 month hold, I think we will see some pps improvement as we approach March:

Revenues are expected to remain at about the current quarterly levels throughout fiscal 2012; resulting in a full year revenue increase of approximately 30%.

http://finance.yahoo.com/news/Imperial-Petroleum-Inc-bw-474440049.html?x=0

[gistheman]

Is that an engulfing candle, coming off the bottom on increasing volume?...

[umiak]

A little review, it seems if anything material had changed we would have heard about it:

Recent Fiscal Year 2012 Developments

During the first fiscal quarter ended October 31, 2011, the Company terminated several consulting agreements that will result in a six-figure reduction in general and administrative expenses.

A letter of intent to sell its Coquille Bay gas activities was reached and it is anticipated that the sale will be completed before December 31, 2011.

Revenues are expected to remain at about the current quarterly levels throughout fiscal 2012; resulting in a full year revenue increase of approximately 30%.

Notwithstanding the net loss brought by the non-cash write-offs, the e-biofuels operations generated net income of $645,175 in the first quarter.



Several management and board of directors changes were made in November, namely: Jeffrey Wilson, former Chairman and President of Imperial Petroleum resigned from these positions due to health but will continue to assist the Company as a technical consultant. Mr. Aaron Wilson also resigned and retains his position as President of the Company’s Arrakis Oil Recovery, LLC. subsidiary. In his place, Mr. Tim Jones was appointed to the Board. Tim was also promoted to Chief Financial Officer and President of the Company’s e-biofuels, LLC subsidiary. Mr. John Ryer’s appointment as the Company’s new Chief Executive Officer and President was confirmed.
Mr. John Ryer, CEO of Imperial Petroleum, stated, “We are very pleased that in a very turbulent market during the first quarter ended October 31, 2011, and, particularly in October, Imperial Petroleum, when adjusted to eliminate several non-recurring onetime non-cash charges that amounted to $1.25 million still showed EBITDA of $1.6 million and we look forward to further success in fiscal 2012.”
Ryer added, “The quarter was one of transition from a Company with multiple businesses to a Company focused on biodiesel with a strong secondary interest in furthering our proprietary oil sands recovery technology, Arrakis Oil Recovery, LLC. Our biodiesel production is at capacity but we are already planning for an additional production platform in our current building that could increase our capacity, and revenues, by an additional 25%.”

“Concern has been voiced about the substantial amount of outstanding short term debt that is scheduled for repayment in January. We are highly confident that our record of repayment that has reduced the amount of short term debt still outstanding over the first quarter of fiscal 2012 from $9.9 million to $8.1 million and $7.6 million currently will result in our being able to renegotiate the debt on terms mutually agreeable to both our bank and ourselves.”
Mr. Ryer concluded, “Biodiesel, by government mandate, is a fact of life and we intend to become a significant factor in that market. As the positive restructuring actions take hold, our shareholders will see a Company that has seen adversity but has recovered to be stronger and better than ever.”

http://finance.yahoo.com/news/Imperial-Petroleum-Inc-bw-474440049.html?x=0

[10 bagger]

There is another way to finance and that would have someone or a company Gtd. new debt and use part of the proceeds of the sale of product to get from underneath the debt GTD..

This would cause no outlay of funds by the Gtd. party and the most likely one to do it is the ones that purchases thier product.. In addition to having the ability to have thier GTD. removed they could/would be given WTS.. This is pretty common in the oil patch.. IPMN need working capitol to survive and if they have no funds to purchase raw materials for product they will have to downsize to the point where they will not be able to survive as when all is said and done they are in a commidity business where margins are small.. . hank

[umiak]

I know that is an idea that has been tossed around since the last Q. I have tried to see the logic from the company point of view and it doesn't add up, at least not at these price levels. With the ng ball and chain gone and(my understanding) the 30% expansion already underway, simply rolling the debt over with the bank and continuing to make payments, makes more sense. They can always address some share financing
down the road. There are probably pieces to the puzzle that I am missing,
but seriously, enough warrants at 50% of pps to make a dent sounds insane. Maybe folks with different experiences will see it differently.

[Traderfan]

Here is one more idea. Could we soon see another round of dilution? That would explain the recent weakness in the share price and it would help them with the debt. Just an idea. What do you think?

[umiak]

Yep, I'm waiting and watching, pretty much.

[Traderfan]

Like I said in my prior posting, usually when I see this kind of action on an already extremely cheap and depressed stock then I immediately think that some problem is coming up. The issue is that volume is not even that low lately (relative for this stock). If you remember I sold almost all my shares prior to earnings (and posted so back then) because I was asking myself why there is such negative price action before the 10q comes out and back then it certainly was an indicator. Doesn't mean that it must be an indicator this time as well.

I just find it odd that we are now below the most recent hysterical selling lows after the 10q. But maybe the stock will recover quickly if the debt rollover (or some other deal regarding the debt) is announced and people are just playing it cautious at this time. All else is just guesses at this point. IMO

[umiak]

Folks are wondering the same as you, selling begets selling. The only other explanations are shorts or dilution. Hard to imagine either at this level. thoughts?

[Traderfan]

What's your take on the price action if neither the debt deadline nor the weather is a problem in the near future?

[umiak]

sorry

[umiak]

again sorry double posts

[umiak]

He also confirmed no weather problems for Q2, which I thought was kinda funny. (he is in another State I believe)

[Traderfan]

Interesting. Thx.

[umiak]

fwiw, IR told me worse case is existing debt holder rolls it over.
There are 2 issues being resolved the debt and selling the ng dept.
I was told everything is on track.

[Traderfan]

I don't think they can tell you that. Otherwise that would be inside info before the markets hear it. This is a material event.

[umiak]

Did you try calling the company and asking?

[Traderfan]

Price action here doesn't look good. I wonder what they will do with the debt deadline.

[10 bagger]

Bob.. What would you pay for IPMN as a mold and hold..??? hank

[umiak]

FWIW: http://investorshub.advfn.com/boards/read_msg.aspx?message_id=70749711&txt2find=%22IPMN%22

[umiak]

ipmn--Imperial Petroleum, Inc. (OTCBB: IPMN) announced that it had positive earnings of $1,192,244 for the six months ending January 31, 2011 or approximately $0.051/share for the six month period on revenues of $29.9 million. Revenues for the second quarter declined to approximately $14 million from $15.9 due to slightly reduced sales volumes of biofuels caused by weather related issues during the winter months in the Midwest.

looks like weather is a non-event for Q2 2012

http://www.wunderground.com/cgi-bin/findweather/getForecast?query=ICAO:KEVV&almanac=1

[10 bagger]

From past postings it seems as though they have enough funds with what was on hand and the funds recieved from the PIPE.. The possibility of negative cash flow is the most disturbing thing to me and although I would take a position again.. I will not until this matter has been cleared up.. hank

[Traderfan]

IMO the main problem here at the moment is that we have no idea yet whether they are able to renegotiate their 7.7 million debt which is due in january.

[10 bagger]

Is there any way of finding out if they are still spending any money on projects other than thier fuel prduction and if the sub. is not reinstated what is /will be the real hit to sales and earnings..

Since they have the ability to now meet debt payments are there enough funds left to provide funding necessary to maintain a positive ETBIA..??? hank

[OXMAN92]

Sale Of C Bay

Has anyone come across any info? I thought a release would have hit by now. I would like to know something??

[umiak]

both works for me

[gistheman]

specifically or generally?