Do my eyes deceive????, page-20

And maybe just another (final?) thought to add to that train, I think MOB has to cares alot about the PV10 related to the facility. The SSN announcement does highlight the values as internal estimates and not formal reserve report. A Reserve report will use SEC pricing. MOB will have its own price deck or simply risk the SEC value by some amount.

Putting that into perspective: This is a table of SEC pricing for PV10 valuation - highlights the difference in 2014 and 2015. Also shows the decline in price over the course of 2015. The prices of 2016 are forward strip.

	Column 1	Column 2	Column 3
0	2014	94.99
1	2015	50.28
2
3	1Q '15	82.72
4	2Q '15	71.68
5	3Q '15	59.21
6	4Q '15	50.28
7
8	1Q '16	46.84
9	2Q '16	42.62
10	3Q '16	39.61
11	4Q '16	39.86

What strikes me is how much higher the 2016 prices are (the Strip price is not a good predictor of price). For example, at beginning of 2015, the Dec'17 contract was ~$64. Presently, it's ~$45. A $20 difference. It's also a $10 difference to the price highlighted by SSN from Oct 1.

You can check it here
DEC17 Futures

DEC'16 is at $40.98

As I said in earlier post, this is deal SSN must have (I reiterate that IMO the Dec Qtr reporting will be ugly) because it really can't continue in its present fashion. I also think MOB would probably see it as good move to give to company a better overall chance of success (i.e. to pay them back).

The credit agreement requires SSN to provide the bank with independent Reserves report as at end Dec. That will address current asset value and what impairment will be recorded (remember they are successful efforts accounting so are not required to do the ceiling test each Qtr). SSN would be in possession of a Reserves report for the intended acquisition. What's left to do is a proforma of how that business combination works.

IMO the combined PD value has to be say $50M for MOB to establish BB of $38M. Gunna be close.

Also I didn't note this before but should the deal go ahead its effective date is Oct 1st, 2015 (so SSN gets that additional revenue for Q4 - which I have not accounted for in the ugly commentary).

GL