Tengasco, Inc. (NYSEMKT: TGC) recently refused to accept a buyout offer that valued it at $0.2736 per share. The offer came from an entity calling itself ICN Fund. The board of Tengasco looked at the offer and after evaluating it carefully, it turned the verdict that it undervalued the company.
The question that quickly comes to mind at this juncture is if Tengasco is not worth $0.2736 per share, what is it worth?
The ground of rejecting the offer
The board of Tengasco, Inc. (NYSEMKT: TGC) rejected ICN Fund’s offer on the basis that it was too low. At $0.2736 per share, the offer valued the company at about $16.6 million. According to the board, the offer fails to appreciate the value of Tengasco’s properties, financial position and future prospects.
In a statement, the board of Tengasco said that ICN Fund’s offer looks like an attempt to acquire Tengasco at a price that is inadequate. The determination of the board was that if the management continued to execute on Tengasco’s business plan, it would generate far greater value to shareholders than the buyout offer from ICN Fund.
How has the stock for Tengasco, Inc. (NYSEMKT: TGC) moved?
Shares of Tengasco, Inc. (NYSEMKT: TGC) have risen to a high of $5.80 in the last 12 months and sunk to a low of $0.60 in the same period. Many energy companies saw their stocks plunge amid a widespread oil price fallout caused by oversupply of crude oil in the global market.
But incidents such as unrest in Nigeria’s oil region, labor strike in Kuwait and massive wildfire in Canada helped to ease the global oil glut and prices of the commodity have gained some ground from their lows early in the year.
It is the rebound in crude prices that seems to make Tengasco, Inc. (NYSEMKT: TGC)’s board confident that the future is bright with strong execution than selling to ICN Fund.
Shares of Tengasco, Inc. (NYSEMKT: TGC) rose following the board’s rejection of ICN Fund’s advances. But pressure will certainly mount on the management and the board if shares of Tengasco begin trend lower than ICN Fund’s offer price.