Glennon had to act to preserve their exposure to MEL and now have control of the company. I don't think it is a position they wanted to be in however they were stuck as the lender/investor of last resort. If there had been an alternative source of debt or capital they would have preferred it.
The only way that Glennon can potentially preserve both their debt ($2.9m) and equity ($3.3m cost) is by providing the cash to develop MEL into a saleable asset. So they dripfeed MEL cash to actually connect O-2 and potentially remediate O-1 and maybe Vali? If this work finally allows MEL to be cashflow positive then it provides a way forward. The absolute priority for Glennon will be to get MEL in a position it can at least cover its costs.
Thanks to @OldGeo for continuing to update his charts for Vali and Odin. Based on those forecasts of 1 mmscf/d at O-1/O-2 it could still generate nearly $200k/qtr in operating profit. Glennon have back ended their interest and capital repayments. I assume that, apart from any one off costs, A&G and staff costs will be further reduced which could provide MEL with a small profit.
If Glennon can get MEL to this position it will provide options moving forward.
Glennon average SP is 1.5c and MEL debt is $3.9m so to get 100% of their capital back MEL would need to be sold for $25m. Sounds laughable however MEL's June presentation indicated that, on reserves, MEL could be worth $1/gj or $33m. (I don't for a second think anyone is paying $33m) I do think though that having Glennon in control and aligned with SH's interests gives all SH's a better opportunity to recover some capital.
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