Let's be fair on me a bit. When I first bought into MRM, it was in a stronger position than it is today. So there was a margin... then that margin was cut down to size. I think I bought in in 2015 and expect 2016 to be a bad year... probably did anticipate 2017 to also be bad but then maybe that's just me lying to myself.
Enough about little old me. The company's director just load up some shares... maybe he's confident about the company? Then there's three major shareholders, two of whom are experienced offshore operators.
So maybe all three of them can collude as they divvy up MRM's assets, maybe they're checking one another so neither will get to upper hand. Maybe they just see value where the market does not.
And no, MRM did not sell their assets way below value. They have sold them at the revised/impaired value as stated in their latest report. So if by greatly under its value you mean the value some three years ago, then certainly. Not the revised value, which, from memory, is some 67cents NTA.
So at the current $0.155, I'd be buying something that's 20cents on a much non-cash impaired dollar.
If oil were to return and MRM can get more work to earn, as RandyMac said up there, a decent return on its assets... Maybe the value will be written up. Who knows.
Is it speculation that MRM will survive this downturn... not really. I mean, it's a bit too close for comfort, but I'd take the banker's words that they won't be calling in the debt until Sept. 2019. In the meantime, I'm assuming that a requirement would be interest repayment... at, say 4% on what will be $320M, that's $12.8M interest a year? Very doable given the INPEX, various other small jobs, utilising some 50% of its vessels, efficiency gains, frozen wages, renegotiated package with the unions etc.
If you're one of the bankers... why would you call in the debt now? You'd be killing MRM, put its assets on a firesale, probably risk the company being sued for damages by the major contractors [do they get first pick at the corpse or the bankers? I'm not sure]...
Anyway, would you risk calling in MRM's debt? I don't think so. And what legal reason would you have to call them in? Can't pay that $13M interests?
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I don't know the offshore oil business but I'd imagine that not any dick and harry with a boat can just rock up to their platform to load and unload stuff. It's a security issue... would you risk anything happening to an offshore platform by subcontracting to anyone? You'd want one who knows their stuff, are trusted and experienced, who operate in the area all these decades.
Sure you'd want the lowest price possible... but there are shortlists of who can tender.
As to oil staying down... why would it stay down for much longer? Supply/demand? Give me a break.
Five years, by 2019, is more than enough time to sweat the pants out of most small operators. Going any longer and it will do more harm than good.
That and for many oil producing countries, even Australia and the US, forget about Venezuela or Russia... oil price is a national security issue. They are not going to let "the market" dictate prices. Read up on it.
Anyway, we're investing in business... some will rise and some will fall. Most things are beyond managerial control, we investors are just there for the ride. If we want complete safety, get a bank deposit.
MRM Price at posting:
15.5¢ Sentiment: Buy Disclosure: Held
