SSN 0.00% 1.5¢ samson oil & gas limited

Hi Buc, I believe I posed a similar thought to that back in May...

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    Hi Buc,

    I believe I posed a similar thought to that back in May - and was roundly ridiculed for saying as much. I hope you are spared the sword.

    The big question is what would NS fetch. Short answer, less than it would have in May.

    First question is who are the likely buyers? Obvious answer would be Slawson, and they might pay a premium or someone like a Northern Oil (NOG) who buys non-operated working interests.

    What would they pay? Hard to say but Occidental drew a line in the sand just recently by accepting a low ball offer after trying to sell for over a year. OXY was not a distressed seller (plenty of cash) but wanted to exit the Bakken and concentrate on Permian. Received approx $600M for 300,000 acres (expected around $3B last year - so just 20% of their expectation - helluva haircut!). Mostly undeveloped acreage so different kettle of fish to a NS which is pretty much fully developed. OXY pretty much said that its Bakken acreage couldn't compete for capital versus its Permian acreage - citing costs and productivity. That's a story in of itself.


    Hi Rob,

    So I guess we pretty much have divergent views here. For the past 4 Qtrs, SSN has had covenant violations in 3 of them. That tells me that the house is not in order. They simply cannot earn enough on what they produce.

    Need you to double check this for me, but my back of envelope calculations say with a overall cash margin was $3.51/Boe - so ~ $269K. Interest Expense for Qtr was $190K. My calc for coverage ratio is then 1.42 and requirement was a minimum of 2.5???

    Working backwards, suggest minimum of about $475K of cash earnings. If Dec Qtr produces say 75MBoe then SSN will need a cash margin of about $6.30. Translates to approx realized avg of $42.75. Plug in say $10 for the Bakken differential and that means WTI avg for Dec Qtr of $52.75

    Sound about right to you.

    To me it has stressed written all over it and the boys at MOB have a non-performing loan on their hands and one wonders what their governance committee and state regulator thinks.

    GLTA.
 
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