I think you are reasonably at the money ... PV9 to be around the $600 - $650M with PDP +/- $400M ... an obviously the Strip pricing as at the time of Reserves report much higher. As far as I can tell after many reads, this PV-9 is not redetermined using strip pricing at end of each Qtr ... it is adjusted for production and any acquisition/disposition ... happy to be corrected on that read though.
If BB is reduced to ~$150M (inc a MLA of $15M) then with the $250M takes you to $400M and with PV-9 at $600M thats 1.5X and safe on both counts of total PV-9 and 60% PDP
The Total Debt to EBITDAX is a pass as long as EBITDAX is ~$100M (4x) ... close but a pass
The EBITDAX to Interest Coverage is safely at around 2.8
Hard to tell on Current Ratio.
All the covenants are close ... which would behoove SNDE to do some renegotiating on terms/covenants given you want to stay ahead of any problems.
Would Nataxis want out straightaway ... I'm sure if another bank offered to take over their obligations they would sell their note to them and exit ... but it would be orderly.
So we don't expect SNDE to have difficulty making the interest payments (hedging covers it - yes?), if any default at EoQ it is "technical" and the question comes down to is the business overall reasonable. What is the banks longer term view as opposed to present scenario. What is the refinance ability in 2 yeas time. Curtailment and Completions might be the Q2/Q3 story and how quickly SNDE can begin to grow PDP again and hedge at required price to earn the return necessary to make D&C viable.
It's not a clean shirt but it is by no means the dirtiest shirt in the laundry.
No "material" default ... i.e. if default it would likely be "technical" and addressed via (temporary) changes to covenant structures. Finger crossed .... $7 is a big call ...
SEA Price at posting:
16.5¢ Sentiment: None Disclosure: Held
