There's a new name to watch in the oil patch, as a previously obscure natural gas play called Sabretooth Energy begins to evolve.
Sabretooth closed a $46-million financing on Thursday, just three weeks after announcing the arrival of a new management team. In the tight world of Calgary oil and gas executives, the new executives are causing all sorts of buzz.
The excitement reflects the fact certain individuals have mastered the art of assembling land, finding oil and gas, developing the properties, then 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 colleagues, plan to put $9.4-million of their own savings into Sabretooth.
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.
- In 2004, Cyries Energy 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, Mr. Archibald and Mr. Crone did a total of 17 separate acquisitions. The new team has a thing for corporate names that start with a 'C,' as the plan is to rename Sabretooth as Cequence Energy.
As part of the reorganization of Sabretooth, all the 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.
Right about now, those who follow junior energy stocks should be asking why Sabretooth spent the better part of the last year drifting along below 50 cents a share. A quickly look at the balance sheet shows the company has been among corporate Canada's walking wounded since August, 2007, when it was caught with $24-million of its cash frozen in ABCP. Tristone Capital worked with Sabretooth's existing directors on the process that eventually saw the new team arrive.
At the moment, Sabretooth's focus is on natural gas holdings in northeastern B.C.'s Montney area.