Don't think a 10Q will be put out for June Qtr (has to be filed by Aug 15 I believe). Being EOFY for SSN they would put out a 10K (think it has to be filed by mid Sep) - essentially US version of Annual Report. That will have critical numbers (balance sheet). I have not reread the SSN Debt Facility in a while, but that will soon (in Dec Qtr maybe?) become current debt as it has to be repaid in Jan 2017 (correct?). There will be another redetermination in Sep (or Oct I believe) and if no further reserves added and price decks continuing to shrink that will put further stress on balance sheet (and share price). There was even an article that external bank auditors (i.e. state regulators) were putting pressure on banks to "fix" their non-performing loans.
I've got my own world of pain with select E&Ps (none more evidenced than CHK). Each has its own special circumstance but everyone is "fixed" with higher commodity prices. Even those with "bulletproof" hedges are suffering - simple because as they roll off current hedges the futures have bleak pricing.
I've long suggested that a W shape to oil recovery was likely (in stark contrast to some) and to expect a retest of the circa $42 low. Now that didn't hold up all that well. This lower for lower pricing environment is I think fundamentally changing the macro fundamentals. The "this time is different refrain" might well be true. Even with all the big time CapEx reductions (obvious ones going on in NA shale but also glbally and especially in offshore) supply is not really shrinking. Again take NA shale. Where are the meaningful production decline. Don't look at EIA or IEA. Read the 10Qs of COP, PXD, EOG, CLR,DVN, CHK and a few more. None are forecasting THEIR production to drop. Most are saying they can keep production flat with current pricing (inc hedging) - some better than others. Some are even adding rigs (e.g. PXD). COP/EOG and CLR have growing DUC/fraclogs and can quickly increase production with any real improvement in pricing (floodgates could be reopened at $60). They are quickly becoming swing producers. Look at their economics. The small guys cannot compete. And then of course OPEC producing 33MMbopd against the publicized quota of 30Mmbopd.
The O&G reserves/resources aren't going anywhere - not US Shale, not US GOM and not in any other location either. $100 oil and cheap money (ZIRP) with denial of risk led the charge. There are lots of companies that won't make it through - not just small ones. Even long term "steady state" producers on US-GOM are losing money now on every bbl oil produced. The names will change. The capital structures will change. The common equity shareholders will get wiped out.
Paradox Basin - needs 3D Seismic & needs 75% WI JV partner. In this environment? And with main producer wanting out and one of the few others that are operating there noting they are suspending in favor of Mancos.
Who believes in miracles? Well for SSN what happens when the debt becomes current? What is the plan for repayment? And if its "refinance" then how/terms. It is after all a high risk speculative stock.
GLTA and may the oil price risk (quickly)!
SSN Price at posting:
0.5¢ Sentiment: None Disclosure: Not Held
