SSN 0.00% 1.5¢ samson oil & gas limited

Hi Rob79, No question there is a plan to address the challenges....

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    Hi Rob79,

    No question there is a plan to address the challenges. FWIW, tomorrow in USA is April 13th. That is the date by which SSN has to submit a plan to NYSE MKT to prevent delisting procedures. IMO most of this plan will echo what is in the 8K filing wrt to the MOB Credit Facility. Part of that is the equity raising. Whether there will be further details in this regard we will see.

    With respect to the Mar Qtrly/10Q - that is a free kick for SSN. The only real interest there for me would be the production data and since it incorporates FB I'm interested in the LOE overall. I call it a free kick as the financial covenants are mute. Doesn't matter what the EBITDAX is. The Credit Facility was renegotiated, the BB was revised downwards (which I warned of), MOB came good for two thirds of FB acquisition and raised the BB and OAS accepted deferred payment for balance of acquisition with a non-punitive promissory note.

    My interest is the Jun Qtr. I take your point about the hedges and when they settle as to the effect on EBITDAX. Again, I'm not trying to be exact but looking for the red/orange/green lights

    EBITDAX is often a proxy for "operating cash flow" because of all the adjustments. So I am calculating operating cash flow as the proxy for EBITDAX and then adding/subtracting the adjustments.

    So for example the Halliburton dispute cash settlement does not factor into my calculation. It would appear in the GAAP Net Income but would be subtracted from EBITDAX. Since I am not working off of GAAP Net Income I can ignore it .... just shows up in cash.

    Likewise the point I made about Round 1 FB. How much of that will become "capitalized" as "repairs and maintenance" (which will increase EBITDAX as you add back the capital) as opposed to LOE as workover which would reduce the EBITDAX. Could be far greater impact than hedges.

    And then of course we have the hedging gains/losses, deferred settlement costs and timing of payment. As far as I know, it is all recorded in the period reported not when it arrives in your bank account. Thus I always read it as:
    "Realized gain (loss) on derivative contracts for the period x to y"
    and in the case where hedges were monetized for cash proceeds there ought to be an annotation like
    "does not include a loss of $N million for the period ended MM/YY related to the monetization of certain hedges. The monetization resulted in cash proceeds of $M million."

    Expect that the deferred settlement charges are there.

    This then becomes the "Adjusted EBITDAX" that we have in bank covenants. Some companies help their shareholders out by breaking it down into pieces. e.g.

    SSN-Abraxas.jpg


    Anyway the EBITDAX calculation what we have to work with is in the Credit Facility. I would point out that the team over at Berkshire Hathaway would say that not thinking about depreciation (the D in EBITDAX) as an expense is crazy. I know we disagree on this sunk capital discussion but I'm with Team BH. The notion of non-cash is nonsense. Its a delayed recording of cash. You have to spend it first. Likewise to impairments.


    I'm comfortable that my proxy calculations, given the unknowns, will roughly in the ball park. If not then I will make adjustments for the next Qtr. All good discussion.

    GFTA
 
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