Have y'all read your 10K in depth? Just a few observations and...

Have y'all read your 10K in depth?

Just a few observations and thoughts on the 2015 vintage....

1. Debt/EBITDAX ratio came in at 3.47 (gosh that was close to 3.5 but comparatively speaking its pretty good result). Implication is about $5.5M in EBITDAX was generated.

2. Operating expense per BOE = $68.35 (this includes $25.50/BOE of DD&A) ... pretty close to a SSN slide that earlier noted their full cycle costs of around $69/BOE. If you then consider the local differential in pricing at say $10-$12 then SSN requires $80 WTI.

3. Cash cost is $42.85/BOE (includes G&A & finance cost). Again, applying the differential means WTI needs to be around $55/BO for breakeven on reported cash costs. The good news is of course that costs are still be squeezed out and hopefully further reduced QoQ through 2016.

Numbers for (2)  and (3) come from page 44 (results of operations)

4. Hedging - not a factor given low volume hedged - but every dollar does count

5. Big Impairments of $21.5M (not a cash cost) - but they were surely expected given the oil price and the way the reserves values are calculated. I would expect a further impairment to be recorded on NS and maybe Rainbow (noting SSN "poor performance in relation to the high drilling costs of Gladys well") for Sep or Dec Qtr.  As a result of all these impairments of past years, Shareholder equity (not market cap) is now just $16.67M - so less than its long term debt of $19M

6.Borrowing base redetermination by end Oct - usual concern on price deck being used by the bank (given where the Strip pricing is) and of course the Reserves are getting lower (because they are being produced and not replaced).

7. Reserves - SEC standardized measure of discounted future net cashflows of producing the Reserves at $34.253M. Be aware that the pricing used is reflective of this measurement ($59.64)

8. Discussion Exploration/Undeveloped properties
Hawk Springs:
SOA II - Dakota formation water bearing - no further work planned - costs written off
Defender - no proved reserves & "controllers have yet to be repaired due to the well's low productivity rate"
Bluff - flow test not definitive to proving or disproving oil leg.
Roosvelt Project:
elected to cease all work in the Roosevelt project and have started letting leases lapse. All capitalized costs written off in June 2015 yr.
Rainbow:
Ready to drill - and must drill prior to Feb 4, 2016 else lease could expire. Working with their partners.
South Prairie:
Proceeding as planned...

Paradox Basin:
Upon entering MMDA, SITLA delivers 8,080 acres of O&G leases at $75/acre cost to SSN ($606,000). #-D seismic being "designed".  Keep this is mind when you read "2016 Estimated Capital Expenditures" and interpret the SSN forecast production graph from its presentations.

9. 2016 Estimated Capital Expenditures (bottom page 50)
Capex budget for 2016 is $1M - with $0.2M for drilling Badger (South Prairie) and $0.8M for Hawk Springs. Side note is Capex is dependent on SSN having capital to spend and specifically say that they do not having existing working capital to fund all planned expenditure.

Where is the capital required for Paradox acreage acquisition and 3-D in the plan?

2016 - looks to have very few SSN specific catalysts to spur SP. Of course oil going over $55 and staying there is good for all E&P companies and may keep SSN in the game.