Hcraboc - i take your figures very seriously as i know you have had a strong working association with this coy and by and large won't argue them. My advisors are a little more bullish about gas going into winter 2012 but that's the nature of advisors.
Your bottom line is interest 5.5 mill and management 2.4m equates to 21.6 mmcf to break even. this would appear correct you do have agreement from other long term posters. However this calculation is a pure accounting assessment which does not fully reflect the real world in which marion operates. Marions deal with the bank is roughly that interest is only required to be repaid once they are cash flow positive up until then it will be capitalised.
So if we take out the interest charge but leave in the management fees we see the cash flow neutral situation before they are required to pay interest out of cashflow . this brings this down to 6.5 mmcf based on your figures . Now before we get into the fact the interest still has to be paid and the capitalisation increased the debt - all of which is correct. Lets remember on thing - this coy ain't no BHP - it is trying to manage itself out of a sticky situation with the proactive assistance and consent of the bank. The world (and HC in particualar) is full of accountants or would be accountants - anyone with business skills who understands the challenges facing business in the current environment would see what they are trying to do and if sscw42 is correct may have a fair go at pulling it off.
MAE Price at posting:
2.2¢ Sentiment: None Disclosure: Held
