SSN 0.00% 1.5¢ samson oil & gas limited

for Williston Basin Sweet (API 44.0 - 44.9) being sold into the...

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    for Williston Basin Sweet (API 44.0 - 44.9) being sold into the PAA system (so a little over $16 discount to WTI).

    That price has to close to the breakeven cash cost of LOE&Taxes plus when G&A and Finance is included for most Bakken E&P (how does SSN stack up - I calculated it as $61.50 based on LQ production using numbers from page 28 of 10Q but that seems high doesn't it?)

    IF a Bakken producer was fully hedged (with swaps not 3 -way collars) for 2015 - say @100% of 2014 exit rate - why would you bother spending any Capex to maintain existing production let alone increase it. Better use of capital would be to leave your Reserves (PDNP & PUD) in ground and buy someone else's production at spot and use your hedges to make a profit.

    The secondary problem is lenders require future hedging. The hedges available to you now are hardly worth having. No financial incentive to D&C new wells. Granted that falling bopd will cause some havoc with companies market valuation but the pace of shale production growth has to slow.

    Were SSN to increase its oil production by 20% this Qtr, it means 35,613 goes to approx 48,000 Bbls oil
    SSN's has 18,704 bbls oil are swapped for $1,888569
    SSNs has $90 Puts for 5,098 bbls yielding $458,820

    Thus first 23,812 Bbls oil worth $2,347,389 approx
    The next 14,198 Bbls worth maybe $652,611 (using $45.97 as the Williston Basin Sweet Average for the Qtr

    Call it $3M for oil. Add $300K for the gas (about 20% than last Qtr revenue)
    I'll use LQ of $1.46M for LOE and $1.21M for G&A

    Make it a very rough EBITDA of $3.3M - $2.67M = $0.63M for the Qtr which annualizes to $2.52M

    Debt is at $15.5M with covenant of Debt/EBITDAX no greater than 3.5 which means $4.43M or more.

    Cause for concern?
 
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