This Small Oil Producer is Ripe for a Takeover… Here’s How to Profit

by Sheena Martin, Contributing Editor Friday, November 20, 2009

Takeovers are big news in the market at the moment.

In fact, did you know that takeovers have the biggest one-day gain in stocks for any asset?

As my colleague – and takeover expert – Louis Basenese says, they’re “some of the safest companies you can own. According to FactSet Merger Stat LLC, the average one-day return for shareholders of the target company is 48%.”

Furthermore, Louis says, “Industries naturally go through cycles of consolidation – waves of mergers, acquisition and takeovers.”

One industry riding this wave as it comes out of recession is oil. And I have a takeover target making strides in oil exploration that could put money in your pocket in a few months

...

• DryShips (NASDAQ:DRYS) reported third quarter earnings of 27 cents a share, 6 cents above Zacks estimates, on revenues of $228.2 million, down 30.4%, but above Zacks projections of $211 million

• Baidu (NASDAQ:BIDU) offered downside fourth quarter guidance as third quarter results posted a slight miss at $2.07 versus $1.47 a year ago

• BP (NYSE:BP) posted 50% better-than-estimated interims as cost-cutting measures generated results of $4.98 billion, down 50% from last year, due to lower oil and gas prices

• Johnson Controls (NYSE:JCI) reported fourth quarter earnings of four cents above Zacks estimates at 52 cents, on inline revenues of $7.87 billion, off 15.5%

• US Steel (NYSE:X) posted a third quarter loss of $2.11, versus Zacks estimates of a $2.91 per share loss, on estimate-topping revenues of $2.82 billion, down 61.5%, but above estimates of $2.67 billion. Noting customer order rates below second quarter levels, the firm provided a cautious outlook

...

In 1996, Frederic Scheer had a vision when he began to market the concept of compostable plastics. This vision led Cereplast from a pioneer to a leader in the bioplastics industry. Yesterday, the vision of Mr. Scheer and the team at Cereplast provided a breakthrough announcement that will change the face of their industry forever with the transformation of algae into bioplastics.

Cereplast has developed breakthrough technology to transform algae into bioplastics with the intention to launch a new family of algae-based resins that will complement the company’s existing line of Compostables and Hybrid resins.

If successful, Cereplast algae-based resins could replace over 50% of the petroleum content used in plastic resins, possibly having a profound effect on the oil industry. Such companies as Exxon and BP have started to invest money in the algae production business because of the potential in their industry.

Mr. Scheer, who is not only

...

Clenergen Corp. is a biofuels company that is approaching the sector from a different perspective – from an agronomy/biology and plantation standpoint. The company’s goal is to produce high-density, short-rotation biomass crops on a commercial scale which will then be used to power, steam and perhaps produce other products from advanced gasification and steam technologies.

The company is led by an eminent Board of Directors and Advisors. Here is a brief overview of the members:

Dr. Arvind Pandalai – Non-Executive Group Chairman

Dr. Pandalai has 32 years of experience in international trading, export and import management, joint ventures, project and financial management along with strategic planning. He has numerous prestigious management awards in his native India.

Robert Kohn – Non-Executive Vice-Chairman, North America

Mr. Kohn has been chairman/CEO, president/COO, and co-founder of three start-up public companies, with a combined market cap of over $1.5 billion.

...

Clenergen Corp. has developed a unique system of co-gasification and localized plantation management using proprietary and mixed biomass feedstocks to implement sustainable supplies of clean energy to regional, independent clients and national electric grids. The “distributed environmental power system” or DEPS combines significant proprietary advancements in plant science with proven, long-standing engineering technologies to achieve the goal of renewable and sustainable supplies of electricity.

Clenergen has an absolutely outstanding group of scientific advisors and non-executive directors to guide them on a path to future success. Here is a brief overview of the group:

Dr. N. Barathi – Biotechnology Science Advisor

Dr. N. Barathi has 25 years of experience in plant propagation by tissue culture and cultivation of plants. He has conducted research in bamboo for the past 10 years and identified an ideal bamboo clone for energy plantation and standardized agronomical management and agriculture

...

The risk factors surrounding the nation’s oil industry are through the roof. The action is costing unprepared investors a lot of money. For proof, ask Delta Petroleum (NYSE:DPTR) shareholders.

Even a first grader can look at this market and know anything but fundamentals are driving the action. Fortunately for guys like me, few grade-school can figure out why.

These days, it is all about the macro-economy. More specifically, the only thing anybody cares about is the value of the dollar. When the greenback is up, the market is down (like today). When the dollar is weak, the market rallies – like last week.

There are several reasons for the trend: flight to safety, inflation, political risk… you name it.

What matters for us as traders is the pattern is unwaveringly true for the crude markets. With oil settlement denominated in dollars, the ever-important energy source is tied directly to the greenback.

The correlation

...

Russia has done a good job cementing its title as one of the world's leading resource nationalists, having effectively expropriated and stolen the assets of dozens of companies, including Yukos, Royal Dutch Shell, BP, and probably ExxonMobil next at Sakhalin.But when it happens in Africa to a Russian company owned by a Kremlin-friendly businessman, the government is up in arms in protest and threats.  I can sympathize with them given my international law practice area ... now that would be an interesting call to take.From Bloomberg:

"Guinean authorities have attempted to expropriate Rusal's property," Russia's Foreign Ministry said in a statement on its Web site today, adding it hopes Guinea "realizes the possible consequences of such actions both for the overall climate of traditionally constructive Russian-Guinean relations and for the socio-economic situation in their own country."...

• McDonald's (NYSE:MCD), reported August same-store-sales rose 2.2%, but noted US comps were up a less-than-expected 1.7%, noting rising unemployment levels and increased competition from price-cutting rivals hurt revenues

• Apple's (NASDAQ:AAPL) San Francisco event once again saw the shares move lower, this year off 1%, despite the welcome appearance of Jobs, and iPod price cuts and improvements.  An 8 GB iPod Nano will include built-in video and an FM radio; price cuts of as much as $120 were made.  This morning JP Morgan (NYSE:JPM) upped its rating on Apple to "outperform" from "market perform," with a $200 price target

• Texas Instruments (NYSE:TXN) raised its third quarter earnings and sales guidance, with third quarter guidance increased to 37 cents to 41 cents a share from prior range of 29 cents to 39 cents a share; revenues guidance was lifted to $2.73 billion to $2.87 billion from prior $2.5 billion to $2.8

...

• MetLife (NYSE:MET) shares fell 7.4% after the shares were downgraded by Raymond James Financial on valuation concerns

• BP (NYSE:BP) announced a "giant" new oil discovery in the Gulf of Mexico, named "Tiber," one of the deepest wells ever drilled

• Acadia Pharmaceuticals (NASDAQ:ACAD) reported disappointing Phase III trail results for its primavanserin drug in treatment of Parkinson's disease psychosis

• Joy Global (NASDAQ:JOYC) announced fiscal third quarter earnings of $1.21 per share, beating estimates of 95 cents a share, on revenues of $956 million, up from projections of $902.4 million. The firm said it sees 2009 revenues to equal its prior $3.5 billion to $3.6 billion guidance, and raised its earnings guidance to $4.00 to $4.20 per share, from its view of $3.80 to $4.00 per share

• Textron (NYSE:TXT) was upgraded by Goldman Sachs (NYSE:GS) to "buy" from "neutral."  Goldman also added the firm to its conviction buy list with a

...

Axial Vector Energy Corp. is a global solutions provider that owns, develops, invests in and licenses revolutionary technologies in areas such as energy. In the energy area, the company has entered into a joint venture with Petrosonics LLC called PETRO-AVEC. The joint venture is owned 60% by Petrosonics and 40% by Axial Vector Energy.

The company’s PETRO-AVEC joint venture was setup to develop, finance and market Petrosonics’ sulfur removal technology which can be used in refineries around the world. The process removes sulfur from all types of crude oil fractions through sonic energy, oxidation and the removal of all of the oxidized sulfur through hydrotreatment.

The PETRO-AVEC joint venture was recently awarded a patent for its sulfur removal technology in two additional countries. The two countries are both oil producing countries – Mexico and Egypt. In both cases, the patent awarded was for

...