This was a really interesting post @aero39 and have been thinking about it for a while. RR/Viaro are already buying up assets at fire sale prices and, you're right, it would make sense to simply wait for HHR to fold. The only defense I can see against this is to remain solvent and be able to fulfil their obligations to the JV. This is why I still like the "backstop funding" that was agreed as HHR's only responsiblity is to remain solvent.
Going off HHR's last quarterly they have $26m cash at end of March. Say they drop another $3m this quarter while they cut staff and finalize any exploration/evaluation costs. They could pull back quarterly costs to $700k/qtr giving them a theoretical 33 qtrs of funding. One strategy for HHR could be cut costs and wait for Labour or RR to make their moves.
HHR are in a similar situation to CVN with Dorado. After the duster at Buffalo CVN stopped any real exploration and elected to conserve cash and wait for Santos to progress Dorado. CVN are still waiting and it cost the CEO and some of the board their jobs.
I personally feel that small caps like HHR are like sharks, if they're not swimming they're dieing. The UK North Sea is a basketcase, at least for now. Is it time for HHR to take $10m of that cash and start looking for opportunities beyond the UK North Sea? (I realise that cash was originally going to be our equity at 40% but IMO that ship has already sailed)
Interested in what others think. Is it time to cut costs and hold on or get back out exploring and investing?
HHR Price at posting:
0.7¢ Sentiment: Hold Disclosure: Held
(20min delay)