Just the opposite GD we are up 6.25% we may get a snippet tomorrow, Continental Resources Plans To Present At Equity Research Conference and may possibly update on their 5th SCOOP project, watch this space lol
We can only work with what we know, that being the production rate, the current oil price, and the at risk debt. So I think a common sense view is required.
If the Bank are seeing the loan being paid down and the company is continuing to generate revenue they are going to extend out the load end date. If they see that there is no hope of getting their money back they will call in the loan and mitigate their loses.
At 240boepd MAGP are generating circa $6000 per day of revenue, or about $1m by end December. Add to that the expect 100boepd from the 10 outstanding wells and you get another circa $2500 per day ($450k by end December). Now that doesn't quite pay off the outstanding debt in the next 6 months, but it probably gets close enough.
As previously, if the WTI moves substantially one way or the other then its becomes a different picture.
I think most businesses especially an exploration and production company like MAGP are at the mercy of their bank,(been there and done it) their are plenty of examples in the same game who have entered into administration and folded, thankfully Maggie has lived to tell the tale in one hell of a downturn, the fact is banks need companies like Maggie or they make no money that is their business and risk before lending and they make the same assessments as RFW and SOS take before taking a lease interest or well participation that is our business and risk.
If the bank were "fussed" they would be out they are happy to carry their risk which bodes well for the confidence in MAGP and our BOD.
These figures are now six months old and reflect oil prices at some $20 plus. Now the situation is changing. does anyone have contact with the BOD and ask for six months Management Accounts with a proposed future forecast?
With respect it's an emphasis of matter not a full qualification.
I appreciate it is not good, but if you read the detail in the note to the accounts it focuses on historic events. At the time the accounts were prepared it was a disclosable fact and as such it needed to be reported.
I'd rather a set of accounts without it, but you could look at it another way. It's not interest cover, it's current ratio, which is largely easy to overcome if the company is cash generative anyway.
What you also seem to have not mentioned is that the covenant was broken, yet the bank did not recall the loan! The bank might not be particularly fussed - it will have been the auditors who will have pressed for this to be included in the accounts not the bank.
Also, MAGP is not in the hands of the bank as you put it. I think we've had enough scaremongering comments for one month don't you.
No, I'm not looking to come back in. A going concern notice is bad news indeed. MAGP is at the mercy of its lender. The report even states "Funding future growth will however be via the Group's own generated cash-flow wherever possible". In other words, no one will lend to them. They were supposed to be making bank-funded acquisitions in the first quarter this year, SS was pitching that to investors like me as recently as last November. Yet, at the same time, the company was in breach of its banking covenants. I suggested at the time that I was worried Snead didn't seem to quite have a grasp of the situation but I was reassured in conversation with him. Now we see that he did indeed have a grasp of the situation - in fact he knew far more than he was letting on. That is not good folks!
It may be that we see higher oil prices and that the financial situation improves but at the moment I think there are better prospects out there.
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