Well Doug, I think TB will look hard at all options (except #4
) and the 10_Q said as much.
The question is what could they sell, who would the buyers be and what price could you get? At this time of the cycle not a good time to sell if you don't have to.
IMO there exists in the Bakken a ready made buyer for some of SSN's assets. The company is Northern Oil and Gas (NOG) and they've built a company on the Non-Operated strategy.
Here is their latest presentation - has some real good comparison metrics too.
http://ir.northernoil.com/common/do...E445678&filename=IBERIA_Conference_FINAL_.pdf
Their biggest operators are Slawson and Continental so again a good fit id SSN wanted to sell NS and/or Rainbow. The issue of course in selling NS the first $19M is going straight to MOB. Hard to see anyone paying more than say 80% of NPV10 (based on NYMEX strip) so call it $30M and SSN nets $11M.
I'm still more than a little surprised with MOB given the multitude of other companies restructuring their capital base to repay their BB (due to restrictive covenants) and issuing unsecured notes. If the Credit Facility allows it, another strategy could be to also issue HY Term Notes for say $25M instead of asset sale - use those funds to partially pay down the BB - say to $10M leaving them with liquidity to draw it back and also with $16M of funds. Since SSN does not provide a GAAP to EBITDAX reconciliation we don't know how wide a miss it was on EBITDAX coverage.
As Buc succintly states
"depends what's beneath the gas caps" on HS/Bluff#1-11 where they have 25% WI and 37.5% overall? If its water then TB would have wished he had strengthened the balance sheet beforehand by selling Notes and/or Equity. Always easier to raise money AFTER you make your discovery.
On the surface it does not appear that TB wants to stop exploration new areas - still have that new undisclosed asset that will need funding as well. Maybe a sale of NS is the right thing to do and go aggressively for the final big score?
