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Archive for the ‘Aspen Exploration Corporation (OTC:ASPN)’ Category

Aspen Exploration Corporation (OTC:ASPN) took the unusual step several days ago of making a second announcement regarding the payment of a cash dividend of $0.73 per share to stockholders of record on November 16, 2009. The company initially announced that the dividend would be payable to stockholders of record on November 16, 2009, with the dividend being paid on or about December 2, 2009. The second announcement provides that the Financial Industry Regulatory Authority (FINRA) has advised the company of the operation of Nasdaq Rule 11140(b)(2), which states:

In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of the subject security, the ex-dividend date shall be the first business day following the payable date.

This means that the dividend will trade with the stock until December 2, 2009, the payable date. Purchasers on December 3 or later will not be entitled to the dividend.

We’ve been following ASPN (see our ASPN post archive) because it’s trading at a discount to its $1.17 per share liquidation value and there are several potential catalysts in the stock, including a 13D filing from Tymothi O. Tombar, a plan to distribute substantially all of the net, after-tax proceeds from the completion of the Venoco sale to its stockholders ($5.3M), and the possibility that the company will dissolve. The stock is down 1.5% since we initiated the position to close yesterday at $0.983. This values the remaining stub of ASPN at $0.24 ($0.97 less $0.73) against a liquidating value I estimate at $0.44 ($1.17 less $0.73).

Here’s the text of the announcement [via Marketwire]:

DENVER, CO–(Marketwire – November 18, 2009) – Aspen Exploration Corporation (OTCBB: ASPN) viewed what appeared to be unusual market activity yesterday and today in light of its previous announcement of November 3, 2009. That announcement advised the public that a cash dividend of $0.73 per share will be payable to stockholders of record on November 16, 2009, with the dividend being paid on or about December 2, 2009. Notwithstanding the Board’s declaration of a record date, Aspen has been advised by the Financial Industry Regulatory Authority (FINRA) of the application of Nasdaq Rule 11140(b)(2) which states: “In respect to cash dividends or distributions, stock dividends and/or splits, and the distribution of warrants, which are 25% or greater of the value of the subject security, the ex-dividend date shall be the first business day following the payable date.” Persons needing further information or interpretation should consult with their broker-dealer or legal advisors.

[Full Disclosure:  I do not have a holding in ASPN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]

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Aspen Exploration Corporation (OTC:ASPN) has announced that it will pay a cash dividend of $0.73 per share to stockholders of record on November 16, 2009 from the proceeds of the sale of its California oil and gas assets to Venoco, Inc. $0.73 per share represents $5.3M, which is just over the mid-point of the $5.0M to $5.5M range estimated by the company.

We’ve been following ASPN (see our ASPN post archive) because it’s trading at a discount to its $1.17 per share liquidation value and there are several potential catalysts in the stock, including a 13D filing from Tymothi O. Tombar, a plan to distribute substantially all of the net, after-tax proceeds from the completion of the Venoco sale to its stockholders ($5.3M), and the possibility that the company will dissolve. The stock is down 0.2% since we initiated the position to close yesterday at $0.983. This values the remaining stub of ASPN at $0.253 ($0.983 less $0.73) against a liquidating value I estimate at $0.44 ($1.17 less $0.73). I still think there’s obvious value here, and there might be another interesting play in the stub after the dividend. This is worth watching. It’s should also be noted, as reader bellamyj has pointed out, that, regardless of outcome of the upcoming shareholder vote, ASPN may not liquidate. This is not necessarily a bad thing if the controlling shareholder plans on monetizing the shell and its remaining cash. He owns 20% of the stock, so he’s got some incentive to do so, and he’s paying out a big cash dividend, which is a shareholder-friendly act. That said, it’s not clear whether that dividend was as a result of Timothy O. Tombar’s agitation or a spontaneous effort on behalf of the board. I’ve been wrong about managers before, but hope springs eternal.

Here’s the 8K filing:

On November 2, 2009 Aspen Exploration Corporation (“Aspen”) declared a cash dividend of $0.73 per share. The dividend will be paid to stockholders of record on November 16, 2009, with the dividend being paid on or about December 2, 2009. A copy of the news release describing the dividend is attached hereto as Exhibit 99.1. The distribution follows the final settlement of the sale of Aspen’s California oil and gas assets to Venoco, Inc., at which the parties made a number of immaterial adjustments to the purchase price paid at the June 30, 2009 closing, and made certain other payments that were not determined until after the closing. At the final settlement date Aspen received a net payment from Venoco, but was required to make various payments to third parties which ultimately resulted in a cash outflow from Aspen in an amount not considered to be material.

Aspen expects that after the payment of the dividend, and its anticipated operations through the end of the current calendar year, on December 31, 2009 it will have more than $3 million of working capital remaining. Aspen currently intends to utilize its remaining funds to maintain its corporate status as a reporting issuer under the Securities Exchange Act of 1934 and to explore other business opportunities. Pending developments with respect to any business opportunities Aspen identifies, Aspen may later reevaluate its status and plans and consider alternatives to wind up its affairs. Aspen’s projections and future plans described in this report are “forward-looking statements” (as such term is defined in Section 21E of the Securities Exchange Act of 1934, as amended) which are dependent upon a number of factors. There can be no assurance that Aspen’s projections will prove to be accurate or that Aspen will be able to successfully execute or implement its operations as described herein.

Hat tip Joe G.

[Full Disclosure:  I do not have a holding in ASPN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]

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Aspen Exploration Corporation (OTC:ASPN) has filed its definitive proxy statement for its November 30, 2009 general meeting and included is a proposal seeking authority for ASPN’s board of directors to dissolve the company

We’ve been following ASPN (see our ASPN post archive) because it’s trading at a discount to its $1.17 per share liquidation value and there are several potential catalysts in the stock, including a 13D filing from Tymothi O. Tombar, a plan to distribute substantially all of the net, after-tax proceeds from the completion of the Venoco sale to its stockholders ($5M to $5.5M), and the possibility that the company will dissolve. The stock is up 6.6% since we initiated the position to close Friday at $1.05.

The relevant portion of the definitive proxy statement is set out below:

10. Why is the Board of Directors submitting a proposal to the stockholders to grant the Board authority to dissolve Aspen?

In connection with preparing for and conducting the May 22, 2009 meeting of stockholders, one stockholder submitted a request that Aspen include a dissolution proposal to be considered at the same time that the stockholders were being asked to consider the sale of Aspen’s oil and gas assets to Venoco, Inc. The Board of Directors had previously considered that possibility, but had determined that presenting the dissolution proposal at the same time as the asset sale proposal would add a significant amount of complexity and risk stockholder consideration of the asset sale. Consequently, Aspen advised the stockholder that Aspen would offer stockholders the opportunity to consider dissolution of Aspen at the next meeting. In response to that statement, the stockholder withdrew his proposal and the Securities and Exchange Commission was able to complete its review of the proxy statement for the May 22, 2009 meeting.

11. How does the Board recommend that I vote with respect to the proposal that would grant the Board of Directors the discretion to dissolve Aspen?

The Board of Directors proposed dissolution of Aspen for consideration of its stockholders because of commitments made in March 2009. The Board, however, has not determined by majority vote what recommendation should be made to stockholders in connection with the vote:

* One director, R.V. Bailey, believes that the prospective value of Aspen as a public corporation with a continuous filing record and clean financial statements exceeds the value of the remaining net assets, and believes that stockholders may benefit by the possibility of making a business acquisition (including a reverse takeover) that could offer Aspen’s stockholders potential long term value.

* Three directors, Robert A. Cohan, Kevan B. Hensman and Douglas P. Imperato are continuing to evaluate whether they believe the Company can identify and execute on a business opportunity that may offer long term value to the Company’s stockholders and as such none have yet authorized the Board to make a recommendation for or against approval of Proposal No. 2.

Although the Board did not determine whether dissolution is in Aspen’s best interests at the present time, the Board did determine it is appropriate to submit the proposal to its stockholders at the Annual Meeting. As such the proposal is being submitted to the stockholders without any recommendation from the Board of Directors. For further discussion on this issue see page 30 of this Proxy Statement.

It’s worth noting that R.V. Bailey, the director opposed to the liquidation, holds 19.17% of the outstanding stock.

[Full Disclosure:  We have a holding in ASPN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]

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We’re adding Aspen Exploration Corporation (OTC:ASPN) to the Greenbackd Portfolio for the reasons identified by MCN1 in his September 3 guest post. ASPN closed yesterday at $0.985, giving it a market capitalization of just $7.2M. We estimate the liquidation value to be around 20% higher at $8.5M or $1.17 per share. Again, not a huge upside but reasonably certain. There are several potential catalysts in the stock. Investor Tymothi O. Tombar filed a 13D notice on July 30, 2009 disclosing a 5.8% holding and calling for the liquidation of the company. Additionally, the company plans to distribute substantially all of the net, after-tax proceeds from the completion of the Venoco sale to its stockholders, an amount that the company estimates will be from $5M to $5.5M.

About ASPN

From the most recent 10K:

Aspen was incorporated under the laws of the State of Delaware on February 28, 1980 for the primary purpose of acquiring, exploring and developing oil and gas and other mineral properties. Our principal executive offices are located at 2050 S. Oneida St., Suite 208, Denver, Colorado 80224-2426. Our telephone number is (303) 639-9860, and our facsimile number is (303) 639-9863. Our websites are http://www.aspenexploration.com and http://www.aspnx.com. Our email address is aecorp2@qwestoffice.net. During our fiscal year ended June 30, 2009, we were engaged primarily in the exploration, development and production of oil and gas properties in California and Montana. On June 30, 2009, the Company disposed of all of its remaining oil and gas producing assets and is not currently engaged in any oil and gas producing activities. We have an interest in an inactive subsidiary: Aspen Gold Mining Co., a company that has not been engaged in business since 1995.

During more than the past five years through June 30, 2009, our emphasis had been participation in the oil and gas segment, acquiring interests in producing oil or gas properties and participating in drilling operations. We were engaged in a broad range of activities associated with the oil and gas business in an effort to develop oil and gas reserves. Our participation in the oil and gas exploration and development segment consisted of two different lines of business – ownership of working interests and operating properties.

(1) We acquired and held operating interests in oil and gas properties where we acted as the operator of oil and gas wells and properties; and

(2) We acquired and held non-operating interests in oil and gas properties.

Previously, we held a non-operating working interest in approximately 37 oil wells in the East Poplar Field, Roosevelt County, Montana which contributed only nominally (if at all) to our positive cash flow and profitability, and during much of the latter half of calendar 2008 resulted in operating losses. Effective January 1, 2009, we sold our entire interest in these oil properties.

Prior to June 30, 2009, we operated 67 gas wells in the Sacramento Valley of northern California. Additionally, we held a non-operated interest in 26 gas wells in the Sacramento Valley of northern California. As described below, we sold our interest in our California properties on June 30, 2009.

Additionally, in the past we have engaged in business activities related to the exploration and development of other minerals and resources. At the present time, we are not engaged in any drilling operations or acreage acquisition programs nor have we drilled any new wells in our current fiscal year.

The value proposition

ASPN is another relatively simple value proposition: it’s liquid assets of $10.7M of cash and marketable securities against total liabilities of around $2.3M, and it has no active business operations. We’ve set out the valuation below in the usual manner (the “Book Value” column shows the assets as they are carried in the financial statements, and the “Liquidating Value” column shows our estimate of the value of the assets in a liquidation):

ASPN Summary G

The catalyst

ASPN proposes to distribute substantially all of the net, after-tax proceeds from the Venoco transaction to its stockholders. It estimates that this amount will be between $5M and $5.5M or between $0.69 and $0.76 per share. ASPN “needs to complete certain calculations before it is able to determine the dollar amount of the assets to be distributed” but “believes it will be able to make this calculation after the October 28, 2009 settlement date based on preliminary tax calculations.” It also proposes to present a dissolution proposal to its stockholders at its next annual meeting, tentatively scheduled for late November 2009. Such a dissolution is not certain, as ASPN “intends to consider other opportunities in the broad scope of the natural resources industry, which may include an acquisition of assets or business operations, or a merger or other business combination.” ASPN has “engaged in preliminary discussions with third parties about various possibilities” however “none of these discussions have resulted in an agreement or any definitive steps toward the conclusion of any future relationship.” One issue worth noting is that such a transaction “may or may not require stockholder approval”:

If the transaction does not require stockholder approval, the board of directors will be entitled to accomplish the transaction in its discretion, although the board may (but would not be required to) seek an advisory vote of the stockholders. There can be no assurance that Aspen will identify an appropriate business opportunity or corporate transaction and consummate any such transactions.

Tymothi O. Tombar filed a 13D notice on July 30, 2009 disclosing a 5.8% holding and calling for the liquidation of the company:

As Aspen currently has no active business operations and a significant amount of liquid assets, Mr. Tombar believes that there is broad shareholder support for the implementation of a plan of liquidation and distribution of substantially all of the proceeds from the Sale and Aspen’s additional liquid assets to Aspen’s stockholders. Mr. Tombar is considering several stockholder resolutions in accordance with SEC Rule 14a-8 for inclusion in Aspen’s proxy statement for its next meeting of stockholders. In the unlikely event of a delayed meeting of stockholders beyond the anticipated late October or November 2009, Mr. Tombar may acquire a sufficient number of additional shares of Aspen’s stock or contact other shareholders with the intent of calling a special meeting to consider shareholder proposals and the election of new directors to the board of the corporation.

Conclusion

ASPN is trading at a small discount to its liquidation value with a likely catalyst in the near future. At its $0.985 close yesterday, it has a market capitalization of $7.2M against a liquidation value we estimate at $8.5M or $1.17 per share. It’s not a huge upside but we believe it’s reasonably certain given that has no active business operations. There are several potential catalysts in the stock. Investor Tymothi O. Tombar filed a 13D notice on July 30, 2009 disclosing a 5.8% holding and calling for the liquidation of the company. Additionally, the company plans to distribute substantially all of the net, after-tax proceeds from the completion of the Venoco sale to its stockholders, an amount that the company estimates will be from $5M to $5.5M, which equates to between $0.69 and $0.76 per share.

ASPN closed yesterday at $0.985.

The S&P500 closed at 1,057.07.

[Full Disclosure:  We have a holding in ASPN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]

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We were going to stay away until after Labor Day, but this is too good to miss. From reader MCN1 on Aspen Exploration Corporation (OTC:ASPN):

Company Name: Aspen Exploration Corporation

Ticker: ASPN

Market Cap: $6.53M (as of 9/2/09)

Stock Price: $0.90 (as of 9/2/09)

Company Overview: Aspen Exploration Corporation is engaged in the exploration and development of oil and gas properties in California and Montana.

Situation:

Being a micro cap stock the management acknowledged in a press release in Sept 2008 that it would begin exploring strategic alternatives for Aspen “including the possibility of selling Aspen’s assets or considering another appropriate merger or acquisition transaction (from press release dated 9/4/08).” The motive behind pursing “strategic alternatives” was three fold: (1) the cost of being a public company for a company their size, (2) the belief the market price did not reflect the true value of ASPN’s assets, and (3) the president’s health issues (had a stroke in Jan 2008).

In Feb 2009, ASPN announced it had entered into an agreement with Venoco, Inc (VQ) to sell its California assets for approximately $8.425M (approximately because it was subject to adjustments). It was a good strategic fit for Venoco who has operations close to Aspen’s. On June 30, 2009 the transaction closed with Aspen receiving $7.6M (net of fees). Additionally, during this time period, Feb 09 – Jun 09, Aspen also sold its interests in Montana for $1.2M. Thus, the total sale proceeds to the company were $8.8M between the two transactions.

The company is trying to decide what to do with its liquid assets, either liquidated and payout to stockholders or pursue new business opportunities. Now management has stated it has reviewed some business opportunities, and thankfully, and has passed on those opportunities. Especially when you take into account that management is willing to look at opportunities outside of oil & gas – which was the company’s core business.

In either late October or November of this year, the company is going to “propose a resolution to consider the possibility of dissolution of Aspen to our stockholders at a meeting of stockholders….If Aspen were to dissolve, it would not enter into another business opportunity but would wind up its operations and distribute its remaining assets to stockholders (from 8-K filing dated 6/30/09).” This is what I and others are betting will happen.

Financials & Valuations:

Here is a look at the post transaction balance sheet (pro forma) as of 3/30/09. The numbers below are taken from a SEC 8-K filing dated 7/2/09.

ASPN SummaryComments on Valuation:

Cash – I margined it at 95% to account for ongoing overhead the company still has to pay.

Deposits – not sure what that figure represents, could be overstating liquidation value here. 50% is arbitrary though amount is insignificant to the whole deal.

Valuation – Estimated net liquidation value of $1.38/share, the majority of which, represents cash and marketable securities at $1.26 compared to market price of $0.90.

Other:

The company also has joint venture, which they entered into in January 2007, with a company called Hemis Corporation where Hemis is the operator and is permitted to explore for commercial amounts of gold. Because Hemis is the operator, Aspen is not obligated to pay for any of the exploration and production costs, instead, Aspen retained a 5% gross royalty on production. As part of the agreement, Hemis paid Aspen $50k in Jan 07, $50k in Aug 07, was obligated to pay another $50k in Sept 08 (which hasn’t been received), and $50k on each anniversary date until production begins. Since the Sept 08 has not been received (and no updates have been provided), the agreement could have been terminated as non-payments was grounds for termination. I have assigned no value to this joint venture.

The stock is thinly traded, usually a couple thousand shares trade everyday. Since my purchases in July 09, the stock has ranged from $0.87 – $0.97.

Catalyst:

Catalyst one – the stockholder meeting in late October or November with stockholders voting to dissolve the company and proceeds are paid out.

Catalyst two (which helps ensure catalyst one occurs) – during May 09 – June 09 an individual (I’ll spare the name, you can refer to the SEC 13D filing, just look it up under Aspen’s filings on the SEC website) acquired $422.7K of stock in the company for an approximate 5% stake. In the 13D filing the individual states his intent which is “As Aspen currently has no active business operations and a significant amount of liquid assets, (individual name) believes that there is broad shareholder support for the implementation of a plan of liquidation and distribution of substantially all the proceeds from the Sale and Aspen’s additional liquid assets to Aspen’s shareholders. (individual name) is considering several stockholder resolutions…for inclusion in Aspen’s proxy statement for its next meeting of stockholders”

Disclosure: I am long ASPN. The information presented is obtained from public filing, please perform your own due diligence as this is neither a recommendation to buy or sell.

[Full Disclosure: We do not have a holding in ASPN. This is neither a recommendation to buy or sell any securities. All information provided believed to be reliable and presented for information purposes only. Do your own research before investing in any security.]

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