Noticed sundance got a notice for not complying with nasdaq...

First 315 Last

Share
Profile

Follow
Mirabiledictu1

1,422 Posts.

258

18/04/20

13:30

Post #: 44116740
Share

Originally posted by cmonaussie: ↑

OK. Gotcha. And that was why I posted SNDE Credit Facility covenants so the right calculations are being done.

We do differ in opinion ... I think their EBITDAX ratio will pass (due to hedging) and they fail on the Current Ratio. This mirrors LONE.

Why did LONE fail on Current Ratio .... because the bulk of "Current Assets" is made up from unused Revolver ($43M) and it gets worse from a redetermination to a lower base.

FCF doesn't help this situation. I can model LONE with >$50M in free cash flow (dropping Capex to about $50M) and they are over 100% hedged on oil. The oil price doesn't matter this year (or even next for that matter). LONE has notes that become due in 2023 (Jan) and while that seems a long way off the revolver has a clause that make the revolver maturity spring forward to 6 mths before the Notes are due (Jul'22) if those notes have not been refinanced before. So in reality they have ~12 months (to Jul 21) to get themselves "organized" (hopefully not a restructuring). To be in a position to refinance the Notes the oil price has to be above their hedging so they can grow production again. But low oil price means low revolver BB means liquidity concerns means why they feel they breach for all 2020.

Even SNDE highlighted the Current Ratio as most likely breach from low oil prices. The filing date is 13th Sep 2019 and it is the HY report and SNDE said (my bolding):

"The Company was in compliance with its covenants as at 30 June 2019. Of these covenants, the Company’s business is most sensitive to the Current Ratio, which may be impacted by fluctuations in commodity prices and the Company’s pace of development. "
Doubt that has changed.

I think that the great big Orange Flashing signal has been there for a while now. It's changed to Flashing Red for LONE ... will it do so for SNDE ???

Expand

Noticed sundance got a notice for not complying with nasdaq listing standards for failure to submit its year and quarter report

SEA Price at posting: 16.5¢ Sentiment: Hold Disclosure: Held
2 Upvote

0 Great analysis

Reply