Its quite amusing reading this thread. As Ironjack very correctly noted a few posts up - the Mac/Tristone debt is non-recourse and attached only to Turner Bayou. It is common practice by just about every US domiciled Oil and Gas company to ring fence each project. By this I mean that each project will be owned by a separate 100% owned subsidiary of the parent company. In PYMs case I would assume that they have a main subsidiary in the US. It will be Pryme Energy LLC or something like that. That company will then incorporate other subsidiaries that it owns 100% of to hold each and every project in. The reason is that the US is extremely litigious and you need to make sure that an event at one project cannot take down your whole company. Say for example if Pryme suffered a blowout due to extreme negligence at Turner Bayou. Insurance only covers you for so much and then its all on the company. if the project was owned in PYM parent company...good night PYM. So for many reasons projects are ring fenced. Pryme are smart enough to understand these risks and it seems incredible that Macquarie did not. ( I note that there have been some fairly recent changes at the head of Macquarie Tristone in Houston - deals like this may explain a bit about that ). So, Pryme are fine. Smart people in the way they structured that transaction. Anyway, all this information can be found in ann reports, market releases and quarterlies, ya just gotta do some reading.
As far as the sale goes. I'd have a bet PYM don't get cash for it. It dosnt make sense. Rather when you look at the project history and the wells that were drilled they would agree to some sort of relinquishment farm-out type deal. If I had $US35-$40 million in the budget to spend on a project Id definitely be interested but not sure Id be paying any cold hard cash. I structure some sort of carry and farm-in. Remember, its not PYM controlling the project now it's Macquarie and I'm pretty sure they would like to see some sort of return without a single further dollar of investment. PYM may retain some sort of carry/back in/ ORI or a right to participate but I wouldn't bank on any cash. Either way, they don't need it.
Annual reports - PYM have always been on Calender Year reporting timetable.....don't panic. just go and look at the ASX website and you can see that each and every year the Ann Report is out at the same time.
Current Day = oil price bears are all around and oil stock bears are all around. I can bet you that PYM and a few other stocks I like right now will be in a happy place. Oil price declines like we have seen create opportunities that were not there the month before. PYM are cashed up. That next project or acreage play has just gotten cheaper for them. they have not lost a single dime on FX as all cash is held in the US. It wont take long for the leveraged players to start to purge assets and a small comp like PYM can make $9 mil go a long long way in that environment. Happy Hunting.
DYOR
PYM Price at posting:
0.7¢ Sentiment: None Disclosure: Held
