Replies to post #5905 on IIIVERSON's BOOM BOOM ROOM!

[alfaspider]

Hammer: If the IR guy from PEIX wasn't bullish on PEIX--

Do you think he would keep his job very long????????


But don't worry buddy boy... Alfa's hanging tight....

[alfaspider]

Hammer: Here's something the PEIX IR guy might not tell you?

http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_P/threadview?m=tm&bn=26743&tid=133142&mid=133143&tof=5&rt=2&frt=2&off=1

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Pacific Ethanol: Potential Buyout Target

PEIX is an operator of a handful of ethanol plants in the western states. They are trying to emerge from bankruptcy, and have recently arranged a line of credit to become a credible ethanol producer. Their current stock price is about $1 per share and they have about $80M in debt:

Stock Price $ 1
Shares Outstanding 83,000,000
Debt (Bal Sheet) $ 25,000,000
New Debt $ 53,000,000
Total Cost to Buy Co $ 161,000,000



Capacity Gal/Yr 240,000,000
Capacity Gal/Day 657,534 gallons per day
Capacity Barrels/Day 15,656 barrels per day



Acquisition Cost $ 10,284 $ per BOD

A couple of things on this: The acquisition cost of just over $10K per BOD is right now about twice that of the average cost of petroleum refining capacity in the US.... however, keep in mind that on average, the margin for ethanol is about twice that as well, so as an investment, someone would be equally likely to get into the ethanol business as they would the petroleum refining business....

Stock Price $ 1
Shares Outstanding 83,000,000
Market Cap $ 83,000,000
Debt (Bal Sheet) $ 25,000,000
New Debt $ 53,000,000
Total Cost to Buy Co $ 161,000,000


Capacity Gal/Yr 240,000,000
Capacity Gal/Day 657,534
Capacity Barrels/Day 15,656
Margin@.25/gal 60,000,000
Acquisition Cost $ 10,284
One year ROR 37%




The potential buyout scenario suggests that if Valero or some other refiner wanted to, given the margins that exist in the industry and knowing what the investment per BOD of capacity is, you could expect a really attractive ROR.... In fact, to make this an equal investment to a greenfield oil refinery project, Valero or someone else would be willing to pay up to $6 per share, and still get the same rate of return....

So based on the current margins in this industry, the really interesting way to look at PEIX is as a potential takeover target..a buyer of PEIX could make on the order of 37% in the first year on such an investment. This is comparable to the ROR that Valero could see when it did its original ethanol deal at the end of 2009. Valero, or anybody else that wanted to get into ethanol, would be delighted to get this deal done.

Chances are the management knows this. They recently took on some debt with the idea of buying back some of their stock, and the debt itself will make the potential takeover less likely....

However, at the current margins for ethanol, and the current price of refining capacity in the oil industry, PEIX is a potential opportunity, of course much more so than it was when the plants were originally built.
Posted by US Oil at 6:39 AM 0 comments

[Ecomike]

You might want to take a good look at AEXP and MNLU now. MNLU is buying out AEXP (share swap merger), and the big new well for MNLU is nearing the news depth now, 19,200 ft. Good news on pressures, and readings, should see both stocks up about 500% very quickly. Maybe by Christmas. Lots of good info in the MNLU IHUB chat forum.

Also COIN seems to have bottomed, now up from .34 all time low last week, break out over .36 resistance back to .40 on Friday. If .40 is taken out, next targets are .50 and .60, a pull back and support at .36 might be a good buy in, if it does not keep running straight up this week from to .50 or .60.

Be careful with the ethanol plays like Pacific ( I lost my ass on the two that Valero now owns for nearly nothing). Price of corn and derivative plays (gambling) on corn feedstock costs for the plants is what buried all the other small ethanol companies last year. And with the weather issues and crop failures in Asia this year, they could get screwed by corn price volatility and fixed sell contracts on ethanol again!

GLTA!