oil $59.16 / boe (60%) - this includes the premium and hedging. (WTI average in Q3 was $56.36)
NGL $13.59 (based on Q2 price) - 20%
Gas $2.38/mcf = $14.28/boe - 20%
Total expected price = $41.07 / boe
Total expected cost = $16/boe (as per Quarterly presentation)
EBITDAX/boe = $25.00 x 14,500 boepd = $33M EBITDAX for Q3
Unfortunately, capex was estimated to be $50 - $60M this quarter, with only $5M to $10M in Q4.
I am therefore expecting a cash outflow of $23M to $27M for the quarter, noting only two days after the end of the quarter we received $18M from sale of Dimmit.
Looks like the $355M closing debt balance is going to increase to $380M in the quarterly, even though two days later it would drop to $360M from Dimmit proceeds.
I feel the already spooked market is going to have a field day on Thursday, as it appears as debt has spiralled out of control - Eric had one job, to ensure that Dimmit proceeds were received prior to quarter end....
If actual debt is around $360M, and Q4 achieves the same EBITDAX as that projected for Q3 ~ $35M EBITDAX less $5M to $10M cash equals $25M to $30M FCF, plus we still have $10M from Dimmit sale remaining = $35M to $40M. Gives us a projected closing debt balance of $320M to $325M.. (against $315M that we closed last year with).
I had expected to see sub $300M end of year debt, but did also expect higher oil prices.
Debt is no doubt the elephant in the room here, and redomiciling to the US is not going to mask it. We need to demonstrate to the market that that balance can be brought down. This year it increased (and that included the sell down of Dimmit)….
SEA Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
