Well they've closely tracked Lonestar ... who are now delisted and in bankruptcy court. Their (SEA/SNDE) mgmt arrogance had to be seen to be believed (at redomicile meeting) wrt their perception of their company versus other shalers in the USA.
Anyway ... nothing a good helping of equity funding and sustained oil price rise wont solve. Present SNDE MC is (well) below the BV of equity ... which suggests they are still overstating their asset values (and that $4M odd outstanding from Dimmit sale may not be collectable).
Just look at their production now .... can't even spend enough capital to keep flat. Company has become a shrinking violet. Wonder why they just didn't cash in all hedges and shut-in all production during the Apr-Sep period. If you look at the revenue the hedges probably would have got them through without them producing anything (although they would have take or pay minimum commitments to fulfill on pipeline).
@Mirabiledictu1Remember my discussion on PVAC and their need to raise equity. Well that happened on Nov 3
https://www.sec.gov/Archives/edgar/data/77159/000119312520284452/d27537dex991.htmThat is what SNDE needs to survive. Unfortunately that means severe dilution for current equity holders ... but say 25% is better than nothing. Juniper Capital Advisors put in $150M (at $8.75/sh) PLUS a producing asset valued (for this transaction) at $38.4M
After this investment Juniper holds ~ 59% of the equity interest in the company
So it can be done ... by the right people.
It is notable that after this transaction
The presentation is worth flipping through.
https://www.sec.gov/Archives/edgar/data/77159/000119312520284452/d27537dex992.htm
That is the asset contributed (for a value of $38.4M)916 boepd 79% oil
.... about $42,000/flowing boepd ... pricey (but they are providing the capital)
SNDE has presently 9,263 boepd 62% oil but with steep decline from PCP (~30%)
Ergo Asset is valued at $305M but on est FTM using 30% decline = $214M(there's one *** that says Asset Coverage ratio will be difficult to comply with)
But I think it illustrates that the company could survive (but like Lonestar and many before it ... the capital providers to get them here are not)
A PE company with an unencumbered (small ... say 1,000 boepd) producing asset could swallow this up by investing say $150M in cash ... at $1.50/sh (so 100M shares) and $40M (40M shares) for the asset (effectively same type of deal) ... so 140M shares added to the 6.88M ... so original SNDE holders have kept just 5%
That might seem draconian ... but $150M in cash is at least 20 XL wells right ... EUR of 500Mmboe and 40% in Yr1 ... real rough numbers ... that 20 x 40% x 500MMBoe = 4Mmboe = 10,960 boepd
So arguably the saviour provides 12,000 boepd and SNDE 6,000 boped .... so 67% of production. IF SNDE can get a deal done where the company survives, anything above 10% ownership is a "strong" company is admirable. Merging with another starving company for 50/50 is the same as 2 starving men agreeing to share a slice of bread. Just delays the inevitable outcome that neither survives
