Indeed....it's painful to even contemplate DD2 not being optimal, BUT it could happen (fingers x'd of course we're all good n rosy!) But there is still potential everything goes to pot, despite positive signs so far.
As you say- we'd be raising cash to survive, the market would hammer us as we go cap in hand - a lot more dilution and oppies issued to sweeten the deal.
As stated previously, I'm pretty sure there's already a skeleton agreement drafted (just my opinion) , with options pending degree of DD2 result quality (the better they are- the better negotiating leverage we have)......, but if I were (say) Shell....and DD2 fluffed.....I'd be making sure terms were revised and stacked heavily in Shells favour....not EXR's. Or I'd be lobbing in a bargain basement bid that had to be contemplated by the Board. If I were Shell (or anyone else really) I'd be optimising my optionality....when of course, we all hope DD2 is sterling and WE get to lever our optionality.
Begs the question then if that hypothetic situation DD2 fluffed (god forbid) would we still go ahead and sign up to a Partnership agreement ?...or kick the can down the road a bit, maintaining 100% asset ownership, raising more cash, at rock bottom prices no-doubt, gambling that DD3 came up trumps and hopefully restoring some negotiating advantage to us to then move into Partenrship?
All hypothetical of course, but success in this game is never guaranteed. I don't like thinking about potential DD2 downside-none of us would of course- .....but risk can not be ignored.
Can you imagine for a moment what Neil thinks about and what keeps him awake at 4am?
EXR Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
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