SL - RFE in the Miss Lime. IMO they are fundamentally flawed wrt to the amount of debt they took on, in the timeframe they took it and with the production necessary to keep within the loan covenants.
Is it a good buy here vs the slide from 70cps a year ago?
On basis of Mar Qtrly
EV/BOEPD = $203,760 (net debt = $85M) MC/FFO = 2.8 multiple (low is not good by itself).
Taken together the suggestion, BOEPD says expensive (unless rapidly growing) and FFO says not making much money from existing operations (will future growth change that?)
When you read the Qtrly its suggesting that CapEx is going to scaled back significantly (which it needed to given the Cashflow position when Capex is included) & that implies BOEPD may not grow quickly at all (depends how many wells are coming online suggestion is additional 7 out of 70 drilled are due to be added to producing but how much decline from existing producers is there).
With the Net Debt likely to remain static (i.e. not borrowing more and D&C Capex to remain within cash generated) and asset sales undertaken to reduce debt, where is the growth?
Screams avoid to me....
BTW I made a change to my spreadsheet so as to highlight the Cashflow & FFO negatives for AKK in future when Capex is being spent on EFS with . Doesn't change the Net Cash but does lower FFO a little to account for interest charge but not enough to change the multiple.
AKK Price at posting:
1.2¢ Sentiment: LT Buy Disclosure: Held
