As much as anything I think gear availability will be a key determinate in any financing decision.
In STXs' GOC presentation they used the example of the Eagle Ford Shale. Permits were 2800 in 2011 compared to 26 in 2008. Multiply that out by the other shale areas and you can see why rigs and frac crews are becoming increasingly hard to get hold of.
At worst we may get one rig onsite and drill the wells continuously. This being the case a drawdown credit facility could be set at about $60M. After 6 wells were on production the remainder could be self funding. Allow for the seventh well and some infrastructure including a seperator and thats about $60M.
They may do the first couple of wells this way to ensure methodology works and then commit to a second rig from the third well onwards. Then step up from there as required.
NEN Price at posting:
31.0¢ Sentiment: LT Buy Disclosure: Held
