This is what I posted before just in case anyone is interested Szaba is wrong about the remaining cash available as its $132M and not $177M as he states but is correct that if they stopped all development they will have enough cash to continue.
However who believes that PB will stop developing stuff !
Also they have stated that to maintain 8000bopd they will need to spend $30M a year on new wells and makeovers. If they don't spend this the revenue will start to decline.
Based on the last quarterly report and using the following assumptions this is my best guess as to the next 12 months cash flow for LNC.
Assumptions Gross oil production increasing to 8100bopd by Dec 2013 Oil price $100 USD AUD 1.04
All figure in $M AUD and are 4 the next four quarters Mar 2013- Dec 2013
Admin -15, -15, -15, -15 Production -12.18, -11.65, -11.58, -11.87 CTL Tech -4.6, -4.6, -4.6, -4.6 Interest payments -1.08, -17.68, -2.55, -18.77 Dev + Exp&Eval -51.0, -30.0, -25.0,-25.0 Net Cash burn each quarter -33.26, -25.79, -12.42, -25.77
Remaining Cash Plus undrawn Debt 1st Jan 2013 $132M Remaining Cash Plus Undrawn Debt 31 Dec 2013 $$35M
So as I see it by the end of this year LNC will still have enough cash but they won't have any spare money to further develop ANY of their assets unless:
(1) They sell something (2)They raise additional Debt (3)They do a Capital raising
The only other option they have is to do JV deals whereby the partner agrees to FULLY fund and take all the risk in developing the asset for a substantial share of the pie. As potential partners will be well aware of LNC's cash situation it puts LNC in a very weak position to negotiate.
Until I see some evidence of a finalised deal it is not a buy for me at current prices which is why I sold the rest on the open today.
LNC Price at posting:
$2.10 Sentiment: None Disclosure: Not Held
