There's a new name to watch in the oil patch, as a previously obscure natural gas play called Sabretooth Energy SAB-T begins to evolve.
Sabretooth closed a $46-million financing yesterday, just three weeks after announcing the arrival of a new management team. In the tight world of Calgary oil and gas executives, the new managers are causing all sorts of buzz.
The excitement reflects the fact that certain individuals have mastered the art of assembling land, finding oil and gas, developing the properties, selling the whole works to a senior company, booking massive profits, then starting all over.
Two proven practitioners of this art are Don Archibald and Howard Crone. And they just landed as the new chairman and CEO, respectively, at Sabretooth. The two executives and their colleagues plan to put $9.4-million of their own savings into the company.
Now, as they say in the money management world, past performance does not predict future results. But consider what this pair have accomplished at three companies they ran:
In 1996, Mr. Archibald and Mr. Crone took Cypress Energy public at 20 cents a share. It was sold to PrimeWest Energy in 2001 for $14 a share.
In 2002, they took over Cequel Energy in a recapitalization that played out at $1.05 a share. Cequel was acquired at $10 a share in 2004 by Progress Energy.
In 2004, the pair headed Cyries Energy when it was spun out of Progress Energy at $1.63 a share. It was purchased by Iteration Energy for $9.50 a share in 2008.
At those three companies, the two men did a total of 17 separate acquisitions. The new team apparently has a thing for corporate names that start with the letter "C," as they plan to rename Sabretooth as Cequence Energy.
As part of the reorganization of Sabretooth, all the existing directors save one will depart to make room for the new crew. The lone holdover on the board is Hank Swartout, who built Precision Drilling into an international powerhouse.
The new cash for Sabretooth comes from a $46-million subscription receipt deal, led by Cormark Securities. The receipts were sold at 86 cents each and flip into stock on a one-for-one basis once Mr. Archibald, Mr. Crone and their $9.4-million are in the fold. At the moment, Sabretooth's focus is on natural gas holdings in northeastern B.C.'s Montney area.
Right about now, those who follow junior energy stocks should be asking why Sabretooth spent the better part of the past year drifting along below 50 cents a share.
A quick look at the balance sheet shows this company has been among Corporate Canada's walking wounded since August, 2007, when it was caught with $24-million of its cash frozen in asset-backed commercial paper (ABCP). Tristone Capital worked with Sabretooth's existing directors on the process that eventually saw the new team arrive.
OSISKO LEAPS ON RUMOUR
Osisko Mining OSK-T shares soared yesterday on takeover rumours, prompting the Quebec gold play to pump out a press release saying it's not aware of any overtures.
If you believe the market chatter, Osisko has caught the fancy of either Goldcorp or Kinross Gold. On an otherwise lacklustre day for gold stocks, Osisko popped up 8 per cent, or 51 cents, to $7.02 a share.
More than 11 million Osisko shares changed hands yesterday on the Toronto Stock Exchange, 10 times the company's normal volume. Osisko now sports a $1.8-billion market capitalization. Macquarie Capital Markets was the single largest trader in the stock.
At the request of market regulators, the company said late yesterday that it "is not aware of any material information of Osisko that may be contributing to the recent increase in market price and the level of trading activity of the common shares of the company."
Osisko raised $403-million in a stock sale earlier this year to develop its mine, a project that entails more than the usual costs, as the company must first move a good part of Malartic, a town of about 3,500 residents in northwestern Quebec's Abitibi region.
Osisko is one of those stories that gives the gold mining sector its charm, as CEO Sean Roosen said when his team discovered the site: "We were very skeptical at first. We could see the Tim Hortons from the deposit."
The company plans to move 205 houses (about a quarter of the town's residences), along with five larger buildings, including a nursing home, a day care centre and an elementary school.
See Andrew Willis's Streetwise Blog at ReportonBusiness.com
- Report on Business Company Snapshots are available for:
- OSISKO EXPLORATION LTEE.