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That’s the point Galicia - taking out a loan is in itself not dilutive (whereas capital raises using shares always are). If however the loan interest and capital cannot be repaid by Company revenues ( as it appears may be the case with PANR) then the assumption is that capital raising will have to take place to repay the loans and hence dilution of shares as a result.
Longhorn generated $713,000 last quarter ($2.9M a year). Company operating expenses were almost $6M last year, it is not even covering that at the moment. (these numbers come from the latest quarterly and annual reports)
88 is also spending around $8-10M a year on well upgrades and new wells for Longhorn so, for now, it is losing money. They also took out a $5M line of credit to pay for part of this years upgrades so Longhorn wont generate anything in 2024 assuming they pay that back this year.
Eventually they will have made all the upgrades though so it should be producing profit not just revenue, 88 has not providing long term guidance on Longhorn though so we do not know how many more upgrades and new wells they will need past this year.
They will need:
- At least $10M/year for Namibia for the next two years ( their share of exploration expenses plus the $7.5M each for the exploration wells 1 and 2, they can skip the 7.5M but how would that make sense).
- $3.5M for the annual lease fees in Alaska
- $6M for annual operating costs, salaries and such
So conservatively 88 needs $11-20M a year for the next two years assuming they do nothing in Alaska until there is a partner, I might dive deeper later.
Galicia, your time would be better spent on a share that you own like PANR. How are they going to survive a massive dilution, who is going to partner them in a JV if they are heavy laden in debt, and where is the capital that was promised to keep the company afloat? The last interview I watched was held by a figurehead, JC, a used car salesman, and a financial guy, who even just looking at him I wouldn't trust, who has ambition but promises beyond his capabilities. imo
When Longhorn has it's new wells in place this year it will be self financing and able to cover leases and exploration costs.
Taximan, you seem to mention Pantheon more than anyone else these days, most of which is factually incorrect such as you recent comments about Jay Cheatham refencing him as ' a used car salesman, and a financial guy'.
Compare that to 'Jay Cheatham has over 45 years' experience in all aspects of the petroleum business. He has extensive international experience in both oil and natural gas, primarily for ARCO where he held a series of senior appointments. These include Senior Vice President and District Manager (ARCO eastern District) with direct responsibility for Gulf Coast US operations and exploration and President of ARCO International where he had responsibility for all exploration and production outside the USA. Jay's most recent appointment was as President and CEO of Rolls-Royce Power Ventures, where he had the key responsibility for restructuring the company.'
Your accuracy is perhaps not surprising given you signed up for the 888Holidings AGM and posted a few questions there about 88e. Even when someone told you your mistake, you strangely justified it by referencing Pantheon (again)
You may be right Rabito, regarding my posting more about PANR but factually incorrect I cannot agree.
As for JC, if you read it again you will find that I referred JC to be a figurehead and rightly so. The other two were the car salesman and a financial guy so if you are going to make poor comment at least get it right.
I did stupidly add a link to 888 and I also explained that the link was emailed to me by the company hence not fully my fault, however I should have paid more attention.
Rabito, just to add to your dilemma, PANR down to 27 today, what is going on? I thought all you 88E derampers were on to something special, or at least that's what you keep telling this board.
Shame they don't have enough money to continue or pay their debt without further dilution. Or is that factually incorrect Rabito? I'm guessing the dilution will be huge this time round ;)
Sorry Taximan, I am an 88 shareholder, have been for years, I swing trade it but also hold a small portion as a lottery play (and by small I mean I still meet RedIrons £1000 requirement to be able to comment on 88).
88 believes the Longhorn well upgrades and new wells will increase production to 600-650 gross BOE per day. Current production is 328 gross BOE which netted 88 $713,000. Doubling production will put them at $5.7M annually, not enough to even cover operating expenses and that is not until 2025. They said they expect it to generate $3M in 2024. (All from the latest investor presentation and annual report)
I did just see in the latest investor presentation they have 5 more workovers and 20 new possible wells yet to do in the coming years. It takes about $2-$3M USD to drill a well in the Permian basin so it is hard to see Longhorn doing more than reinvesting in itself for the next few years. That is not a bad thing at all though.
Both companies are going to dilute and both are going to continue in a downtrend until they resolve the larger outstanding questions. This is how long shot exploration companies operate, this isn't Conoco Phillips we are talking about.
My mistake Galicia, when I see someone talking down about 88E I assume they are not holders as it wouldn't make sense otherwise.
I am sure that you are also aware that 88E does not cover the full cost of work at Longhorn so your $1-2M equates much lower. Finance is in place for expansion this year ($5m) in Texas, and the company have stated that they are fully funded for more than a year.
Their contribution in Namibia is fully paid in share dilution this year and any further payments creates a larger % of ownership for 88E. Total payments expected at $18.5M which gives the company 45% ownership and a large part of that has been paid to date. All of that investment and still 88E has no debt, compared to PANR who are standing still in deep water with a hole in their wallet.
Both companies will no doubt have to dilute again in the future and I would rather be with the company with no debt and great potential across the globe than a one trick pony stuck in the ice. (the water is getting colder)
Many potential partners to share the burden in Alaska for 88E Leonis and 1B+ barrels in the ground at various targets, not including the multi B expected in Namibia, of which 88E will be the largest shareholder, or the 1M+ barrels in Texas.
And thank you for the lecture as I really thought 88E was akin to Conoco Phillips, although not listed on AIM ;)