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RAM Energy Partners: The Start Of Something Great Or A Terrific Short?
Posted January 24, 2012
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By Roger Newman
RAM Energy Resources, Inc. (Nasdaq:RAM) is "an independent oil and natural gas company engaged in the acquisition, development, exploitation, exploration and production of oil and natural gas properties, primarily in Texas, Louisiana and Oklahoma," to quote their website. As recently as last fall the firm had outstanding shares of about 79 million for which the net income figure for third quarter of $0.15 per share looked fairly reasonable. A small E&P firm with earnings is often an interesting play to evaluate. The stock has traded under $2 for much of the year until about a month ago when RAM announced major news.
On December 22, 2011, RAM announced that Floyd C. Wilson had made a capital investment of $275 million in common stock (at $1.25 per share), a $275 million convertible note at 8% (convertible into stock at $1.50 per share), and warrants for another 110 million shares at $1.50, admittedly a premium to the price of RAM at the time. This added about 220 million shares to the current outstanding and another 290 million as part of the convertible note and warrants. That's quite a dilution off of a base of 78 million shares! Yes, the company did receive $275 million as part of the share offering, but the note and warrants are pure dilution. The company also announced a reverse split to become effective February 10, 2012 and reverse splits are rarely positive events for a security. READ FULL ARTICLE HERE
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RAM Energy Resources, Inc.
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