Friday, March 8, 2013

PennWest climbs after buyout article

Earlier today I read that Penn West Petroleum (PWT) was climbing on the strength of an article posted on Seeking Alpha. The post speculated on what a sale of the petroleum company would mean to its stock price.

I checked out the article and smiled. I have had a lot of luck with buyouts during my years of investing. The first one I encountered was Britoil back in the '80s. The little North Sea oil producer was taken over by British Petroleum.

The last one to touch me was Progress Energy. The Canadian natural gas producer was taken over by Malaysia's state-owned oil company Petronas in a 6-billion dollar deal. My wife was really happy with that turn of events. I had just put some of her portfolio in Progress and, as I recall, I got her into the game for something around $10 a share. With the Petronas bid, she saw her investment approximately double in value.

Here is a link to the Seeking Alpha article that is possibly driving PWT higher today. At this time, PWT has gained more than 4% during the trading day.

PWT is not one of my favourite oil companies. I ended up with PWT in my portfolio when PWT took over Canetic. Now there was a buyout that didn't put a smile on my face. With a stake in PWT, I started following the stock and have increased my exposure to PWT over the years. It pays a nice dividend, it is among the best paying stocks that I own, yet, I would be happy to get anything close to what the Seeking Alpha article envisions as a possible buyout value.

Just a note on CET

The Cathedral Energy Services stock price tumbled over a cliff yesterday. I bought 600 shares of CET that I found in the rubble. My average price was below $4 and the dividend yield was north of 7%. Today the stock tried to stage a comeback but failed. It couldn't get past $4.10. Right now it is selling for $3.78 and the yield is approaching 8%. The volume today is absolutely incredible. It is over 1.25 million and the market is not yet closed.

I'm holding pat at the moment but if I buy more I will do it soon. A Q1 dividend of $0.075 per share with a date of record of March 31, 2013 has been approved. The payment is April 15, 2013. (Some are reporting an 8-cent dividend but I think this incorrect. I believe, they are rounding up the 7.5-cent dividend. With such a small amount, I think this is inaccurate.)

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