Yes V-H also important in the Balance Sheet context. Not a line-item in EBITDAX calcs though..
Rob, OK understood on the adjustment - I see what you're doing. Below 4.5 would be a good result for SSN for TTM EBITDAX Mar'15. Hell of a lot better than the 5+.
But, I am still perplexed though, as the Bank's formula is the pretty standard adjusted EBITDAX to really focus on the core earnings potential of the asset minus all the noise of derivatives gains, asset sales/impairments.
The US method, at least as far I see it mostly, starts with the Net Income and then adds/subtracts the relevant line items.
A recent one I am following is Emerald Oil (EOX) - mentioned them before - and if you look at their recent Dec results its very easy to follow with Adjusted EBITDAX right towards the end of the link.
http://ir.emeraldoil.com/company-ne...-oil-reports-fourth-quarter-and-year-end-2014
That's what I wish SSN would provide.... they provide just about every else you need for investment decisions.
EOX is interesting because:
Dec 1 :
"The bank syndicate completed its regular semi-annual redetermination of the borrowing base, resulting in an increase from $200 million to $250 million. The next redetermination of the borrowing base is scheduled for April 1, 2015."
Feb 4:
"Emerald's proved reserves increased 99% year-over-year to 26.3MMBoe." Nothing on NPV though. They also note their liquidity as
"As of December 31, 2014, the Company had $187 million of available liquidity with $12 million of cash on hand and $175 million of undrawn borrowing capacity on its credit facility. "
Feb 5. Announce $25M Equity offering ...
"Company intends to use the net proceeds from this offering for working capital and for general corporate purposes." So much for that liquidity comment. That's a telegraph of their expectancy of a BB reduction if ever I saw one! They also swapped some of their low priced (interest rate) convertible debt into equity.
Then from Q4-14 Earnings call transcript you get:
Ryan Smith - CFO
Thanks McAndrew. We are extremely focused on managing the business based on the current oil price environment. We are also focused on managing our balance sheet during this downturn as it is important to note that we had liquidity of approximately $187 million at year end.
While our borrowing base was set at $250 million in last December, we currently expect to see some reduction in that number in our April redetermination. Still, we anticipate the borrowing base to be set at an amount that gives us significant and more liquidity than required to execute in our 2015 capital program, even with the banks running our reserves at the lower price deck.
The EOX credit facility covenants includes a requirement for debt-to-EBITDA to reach no more than 4.0x for the trailing four quarters.
Now you also have EOX filing another registration with SEC for up to $100M equity offering for ATM sales.
Those are "red flag" actions of a company scared of tripping their BB covenants or a reduction greater than expected. They have also IMO caused the share price to halve from $1.2 to $0.60 since early Feb.
If you were to take a quick look at them you'd think all is well - they are in the core of the Bakken with near 100,000 acres in McKenzie County, producing 3,500 boepd and good proved Reserves.
That's why I am cautious on SSN.
