"Gotta know what the MLA is going forward, their Capex plan for...

"Gotta know what the MLA is going forward, their Capex plan for the next 6 months at a minimum and what exactly happens with the debt facility if GC-21 is delayed."

This will be super interesting. Thanks for all the posts over the last few weeks by everyone . The way I read it now makes a lot more sense...I'm disappointed I didn't pick up on it earlier but management really should have disclosed these elements earlier. The way I think it works is something like this:

• Otto would have completed liquidity level forecasts from date of first drawdown. I.e. this would have included cashflow from operations, investing and financing. Financing would have essentially been Nil as the only financing cashflow should have been from MQ. They would not have been forecasting a cap raise.
• To ensure the facility is only used for true dev capex, the MLA will be tied to dev capex. This then makes sense that if something is subsequently not dev capex, it needs to be paid back if our MLA was breach. i.e. F5 did this. We flew too close to the sun. Maybe this is why we didn't proceed with F4 in the first place, as it was too risky for our MLA?
• The MLA sounds like it is reviewed quarterly.
• Once we are past March quarter, and we don't do anything outside of the capex forecast, things should be easier providing we:

1. Don't incur cost overruns at GC21
2. Obtain sufficient operating cashflow to repay the $2.5m per quarter from the amortising loan.
3. Oil price recovers sufficiently to fund our Hilcorp commitments. We have three wells left with a potential $1m abandonment cost each if don't proceed. MA stated that Hilcorp view was they won't be funding any of this capex in 2020.

Number 3. is the big one for me.....I don't think Hilcorp would want to do this in the current environment but at the same time they wouldn't mind $3m USD for nothing either!

Obviously in addition to the above, there will be the other applicable financial covenants, which MQ appear to include standard as NPV PDP at 1.3 times and current ratios excluding loan repayments. If GC21 is delayed, I don't believe this would impact us as it's not as though we would be obtaining much net cashflow at current prices anyway! If we can delay $5m or so capex, it would be a good result?...even if we have sunk so much into it. however in saying that, given it's a tie into existing platform infrastructure, with initial flow rates forecast c10,000 - 15,000 bbls per day....opex cost per bbl should be under $10....and at $15 margin (?) x 1,500 bbls a day for the first 6 months....would provide $2m cashflow per quarter. Enough to service our debt repayments.

What we now need to see is a clear path forward. Cashflow forecasts. Permanent management & board overhead reductions in both salary and headcount. No performance shares issued at current price! Capex minimisation plan. Operating strategy including GC21. Sucks being a minority partner in times like these as its totally out of our control.