There has been a fair amount of information released publicly by MEL and VEN this week.
For MEL, and Michael Glennon, there remains only the question of scale at Odin. Specifically
- how much gas has been produced but not accounted for in the prior quarter?
- what are the actual current production figures from Odin?
As operator VEN has indicated that "the cost of the program can be recouped many times over" and noted that O-1 more than doubled production immediately following the scale remediation. VEN also has indicated that the cost to remediate the scale issue is $800k.
IMO Glennon will provide the $200k for Odin and funds required to keep MEL afloat while the scale is dealt with at Odin.
IMO neither MEL/Bridgeport would support the capital required for remediation at Vali ($1.4m) If Odin is successful remediate Vali from cashflows, if Odin is unsuccessful Vali is irrelevant. (there is very little FCF generated from Vali due to the AGL prepayment)
VEN needs to raise cash for working capital and to fund their share of Odin. Raising at all time lows, when the the number 1 shareholder (Regal) is dumping with an offer that has no discount will be hard. Adding in additional $700k for Vali without JV agreement just makes it harder.
So what happens if VEN can't raise the funds? Will they scale back the raise and exclude Vali? Can VEN farm down or sell any other assets? Will VEN move to sell Vali/Odin?
IMO Bridgeport and MEL need to ensure that the operator (VEN) moves on scale remediation at Odin and is not distracted trying to raise additional capital.
So I think
- It is all about scale at Odin and the potential increase in cashflow from it's resolution
- Glennon will support MEL WC and share of Odin scale costs
- MEL/Bridgeport will not support any additional capex
- VEN will struggle to raise $2.1m
What do others think is going to happen?
(20min delay)