Big call gdn001 They were producing 2600bopd and 7mmcfd...

Big call gdn001

They were producing 2600bopd and 7mmcfd literally 12 months ago - netting $260k/day - current production at the moment is ~1250bopd and 3mmcf - they are netting ~$120k now less than half what they were 12 months ago.

Very big call to assume production in the next 12 months will replicate the past noting position 12 month ago they started from a position 100% higher than present.

In terms of oil price outlook one cannot look past the fact 1/3 (475bopd) of current production is hedged at $75 for the next 2 years. It looks like they will need to hedge a further 200 bopd to access the next prepayment - ~50% of current production needing to be hedged significantly below current oil price.

Taking on $22M will need to repay over 18 months ($1.2M per month repayment)

Net income $3.6M per month less admin corp/production costs $1.2m month (currently) less finance cost $300k month = ~900k month surplus

Plenty to play out here but to get simply back to where they were 12 months ago they need both wells to flow better than any of the current SM58 wells to date - based on the logs released to date this is a huge ask.