Of course Accounts Receivable of $1.6M and Accounts Payable of $5.1 means effectively you owe another $3.5M .... SSN needs $27.37M to get back to even. Chuck in another $2.63M for development capital so they can start producing and you get $30M as minimum needed.
As Doug says, why would you pay up for a half share??
1. Consider Gunna's report card as an operator. Would you invest capital and let SSN be the operator?? Be real now.
2. MOB has lien over the asset. The first $24M of any amount a JV would pay goes to MOB and then SSN becomes free of the credit facility.
3. Assume you have $30M and you believe you could operate FB profitably (hey @Rob79 if you are still watching SSN closely, can you maybe get some graphs up of oil production and water production ... I think produced water is overwhelming the property and hence the waterflood requirement) what would you do? IMO wouldn't you deal with the bank. Potentially could get MOB to take a small haircut and you could provide DIP financing and push equity holders out completely (we only account for $182,942 as stockholders equity on balance sheet). Maybe get it all for $20M DIP financing, cancel existing equity, issue new $10M of equity.
What incentive is there to keep SSN around if you think FB is worth a punt?
Gunna got us to this point. All those presentations all promising gunna do something, economic at this price blah blah. The plan to acquire FB was a good plan but it was not executed. Either poor due diligence in that FB wasn't the asset they thought it was or poor execution on delivering results (spending more or not having enough capital to spend because it all went to pay G&A (which MOB capped and SSN paid little attention to)).
I hope you're right Buc and some fool ASX O&G company pays $25M for a 50% JV.
SSN Price at posting:
0.1¢ Sentiment: None Disclosure: Held
