May. 13 at 2:25 AM
$REI Been thinking about this equity raise. They're well within covenant compliance so this wasn't forced.
Two most likely explanations:
1. Setting up to be acquired - Banker assembly is way too big for a
$60MM raise (Mizuho, BofA, Raymond James, plus three co-managers). Sonu Johl came from Raymond James with an M&A background. The Q1 call was structured like a presentation to potential buyers - asset overview, operations deep-dive, forward AFCF projections. and 5-year transformation slide. Could be positioning for an acquisition at
$4-5+.
2. Iran war upside - Biggest oil supply shock in history with some calling for
$200 oil. The damage is done - drained reserves, shut-in wells, infrastructure damage, and shipping insurance/risk that will keep Hormuz traffic lighter even after it reopens. The debt reduction reduces required hedge coverage, freeing them to participate even more in sustained high oil prices.
Either way, the raise isn't desperation - it's positioning for what's coming next.
