The Successful Investor Hotline – Friday, June 13, 2008

Article Excerpt

PRECISION DRILLING TRUST $27.58, Toronto symbol PD.UN, has launched a hostile takeover offer for Grey Wolf Inc. of Houston. Grey Wolf operates 121 drilling rigs in the U.S. Gulf Coast and Midwest regions. Right now, just 17 of Precision’s 240 rigs operate in the U.S. Expanding outside of Canada will give Precision steadier revenue streams, as many of its Canadian customers suspend exploration during the winter. Precision is offering cash and units worth roughly $2 billion U.S. for Grey Wolf. Precision will limit the cash portion to one-third of the total. The price is nearly five times Precision’s 2007 cash flow of $419.7 million (Canadian) or $3.34 a unit. Precision feels its offer is superior to Grey Wolf’s recent agreement to merge with rival Basic Energy Services, Inc. However, Grey Wolf has rejected Precision’s offer and still plans to merge with Basic Energy. Whatever the outcome, we still see Precision Drilling as a buy for aggressive investors. AGRIUM INC. $106.46, Toronto symbol…