The possibilities for Eric and the team are quite fascinating. They might be able to participate in the sale process and INCREASE their stake in South Antelope, or they could piggy-back on the sale and walk away with a tidy sum which will allow drilling to go into overdrive on their other land.
I'm hoping SEA is given an offer too good to refuse but on reflection I could understand why they might opt to raise debt and grab another 10-15% of S/A and perhaps even operator status. With oil looking strong at $96 WTI they should have no trouble debt funding to the tune of $100m if they took advantage of the high oil price and hedged most of the production at $100 PB. It would fast-track the companies ambitions to reach 5000boepd, perhaps leaving us with 3000-3500boepd by years end. If the numbers are right for SEA we'll find out fairly soon either way.
Scenario 2 would certainly make the market sit up and take notice. We'd be in the sights of the fund managers, with plenty of cashflow to continue growth on all fronts. The reason I think SEA can pull this off is down to the current change in market sentiment (Even though that window may soon close) and the strong oil price. Again, debt funding is not out of the question, given their facility already in place which could easily be modified to accomodate the purchase.
I'll put me pipe down now... the room's full of smoke.
DJ
SEA Price at posting:
50.5¢ Sentiment: Buy Disclosure: Held
