If TB has some positive news, this would be the week for an announcement to get the ball rolling. The buyers side is increasing and whilst it’s looking more like a run could be imminent, I still think SSN at this stage is high risk because they were unable to raise capital through debt funding and had to extend their Rights Offering because of the lack of interest.
SSN would need to have a large portion of the RI subscribed this week in order to complete the 4 wells in the Stockyard development. Otherwise I doubt if they would have enough funds available to frac and complete any of the wells. SSN would need to have enough cash available for SOUTH PRAIRIE, admin fees, development costs, repairs and maintenance plus a break lease cost of $5M for the Frontier rig as I believe it is a matter of when, not if.
SSN will not be able to afford $26K per day if all the wells aren’t completed because of the lack of cashflow and even if they are successful they may not come on line until August or September. Once these wells are drilled IMO the Frontier rig will sit idle again because SSN will not have enough funds.
If SSN do a JV in the Permian in HS or Roosevelt they would still need to have cash available to participate unless they can do a deal where all costs are fully funded, otherwise they would have to sell some assets which is a real possibility.
Cheers Matsim
SSN Price at posting:
2.6¢ Sentiment: None Disclosure: Not Held
