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URL:  http://boards.fool.com/i-really-am-bullish-on-their-portfolio-of-30468439.aspx

Subject:  Re: RE: Black Elk's 13.75's of '15 Date:  1/5/2013  3:33 PM
Author:  globalist2013 Number:  34601 of 35400

I really am bullish on their portfolio of properties, especially Louisiana region, and also their other interest in wells and offshore acreage as well. It's quite extensive and vast.

altstrat91,

No question about that. The Moodys' report sang praises of what Black Elk owns and how they are managing their business. But I'm trying to look a bit further out. BE can meet their obligations only if they can sell product. But if/when the US economy turns down, energy demand and energy prices will drop as well, leaving BE with debts to pay and no means to do so. They can't go back into the market and borrow. Lenders are going to laugh at them. "Oh, sure. We'll let you re-fi your 13.75% note. How about 20% this time?" What BE will probably do is solicit a consent from creditors and try to convert the note over to a PIK, of which I wouldn't want any part.

In other words, the game with turning a buck on Black Elk is a game of bluff. Does one buy 'em now, or does one wait 'em out on the very likely chance that they can be bought a lot cheaper down the road, or that they will have gone under by then and one sidesteps yet another BK by waiting? Frankly, whatever buying I did last year and might do this year is merely treading water. When the economy blows up --and it will, because nobody can print their way out of debt-- and markets crash massively -- which they will-- then I go back to work in a disciplined manner and pick up far better credits than Black Elk, but at the same yields Black ELk is now offering. I did it in 2009, 2010, and even 2011, adding dozens of names in judiciously-sized positions, and the next lows will be even lower.

Now is the time to track Black Elk and, maybe, get in on single. But I won't go five at their current price and precarious circumstances. Instead, give Congress and the Fed time to screw up the economy once again, and then go shopping.

Charlie
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