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CUDA under pressure to sell more assets to pay down their $67m debt but trying to hang to their WI in BF Shannon.
Tells you how valuable the BF Shanon and other Wyoming leases are.
Arthur i think waiting till end of Sep to see if CUDA get any binding offers, before any fire sale of assets, etc.
In the meantime COPL sitting on healthy cash balance and increasing and another $20m undrawn credit facility available...ready to pounce. By Q1 2022, production could have increased to around 7500-8000 bopd.
Thanks FS, good spot.
Seems CUDA looking to sell everything except BFU and hope they can extend the payback terms to their lender based on increased production revenue gained by the MF.
It will take them years to pay of $67m debt, but COPL have increased the worth of their WI substantially across all units - Successful MF campaign-soon to be at the max 10k rate injection, increased pressures inducing topside expansion, Fed Deep drill expanding Shannon scale - to be assigned to BFU, CC well recompletion and overall increase in reserves and their company value on full sale.
Their comms look to be bullish on continuing operation with Wyoming the focus:
"Proceeds from the Alberta sale will be used to advance development and increase oil production of Cuda's major asset at Barron Flats Shannon Secondary Recovery Unit in Wyoming and for corporate working capital purposes."
But they also warn they may not be able to continue business, they have to sell the company assets but does that mean all of them?
If creditors demand payment now, what then?
Southwestern legal action was also to gain first in line for payment:
RNS Aug 13th
"a declaratory judgment as to the lien priority against Bridging and Tallinn to affirm Southwestern's first lien priority on Cuda's security against the Barron Flats Unit"
Past $8m debt key they had with Atomic at deal completion (now an asset of COPLs) as they have no ability to pay this up front, plus other accumulating debts:
"Cuda's current cumulative operating arrears owed to Southwestern for the month ending June 30, 2021 amounts to US$2,495,172.68 as reflected on Cuda's July 2021 Joint Interest Billings. It is noted that the Claim against Cuda will be subsequently amended to reflect Cuda's ongoing cumulative arrears, and any further resulting damages."
Interestingly, in Jan 2021 it was agreed with CUDA to have no further drilling for BFU in 2021:
Prospectus, page 111:
"Until December 31, 2021, SWP, as operator of the Barron Flats Unit, and Cuda agreed not to propose the drilling of any new production or injection wells."
Why would AM agree to that? it helps out CUDA cashflow on % of drill costs this year, on the surface is of no material gain to COPL. Instead this year we have low cost CC well recompletion and one Fed Deep drill they had to progress or lose the permit - alternatively COPL is cash rich as limited drill spend, there is no accordian draw down yet so AM has around $40m funds to access for any WI procurement.
This was released by Cuda on 30 August 2021
At June 30, 2021, the Company had credit facilities with an outstanding balance of approximately $67.1 million including all unpaid interest and financing fees. On August 23, 2021, the Company received a limited waiver from the Senior Facility lender. The Senior Facility lender waived the principal and interest repayments required to June 30, 2021, and the ability to apply the default interest rate of 19% per annum up to June 30, 2021. The Senior Facility lender has not waived the operational and financial covenant breaches at June 30, 2021. The Company also had a convertible debenture with an outstanding balance of approximately $1.8 million including accrued interest. The terms of the convertible debenture is still subject to regulatory approval.
The Company and the Senior Facility lender have agreed to engage a sales advisor by August 9, 2021 to pursue a sales process, including the opening of an online data room by August 27, 2021. Additionally, the Company shall execute one or more non-binding letters of intent by September 30, 2021 and a binding offer to purchase by October 31, 2021.
WTI approaching $73. Gold crashing.
Hold onto your hats.
Canada got autocorrected to candy, which I prefer :)
Something mildly interesting for all to discuss tomorrow, CUDA are selling their Candy gas play (Alberta). $2.67m, which won’t go very far in my humble opinion.
https://ceo.ca/@newsfile/cuda-oil-and-gas-inc-announces-agreement-to-sell-alberta