RE: ..4 Mar 2025 11:24
Thought I'd clear some things up a lot of confusion.
1) Why didn't the company just use their debt facility?
Answer: The debt facility is maxed out. The Borrowing Base of $4,250,000 and as you can see from the last results the company has maxed this out. The base may grow in May when a redetermination will be completed.
2) The company is in profit, why isn't it just using it's cashflows.
Answer: the company IS profitable at these levels, but barely. At $65 WTI the company will only be making around $6k per month roughly in FCF (90bopd pine mills). Once this phase is over it will jump to $30k FCF PM. The company has a high torque to oil prices and production because of its fixed cost base.
3) I wasn’t expecting this one as I thought they have sufficient funds from the last placing.
Answer: No, the company clearly demonstrated this in their last presentation. They show the total cost of the 5 wells in Phase 2 to be $811,230 which is £600k +. They've then had additional costs with unplanned maintenance. They were always going to need to raise further funds to finish this phase. The question now is will they need ANOTHER raise to fund Fouke 3. I wouldn't think so.
The company have given you the netbacks on their presentations so just adjust them lower owing to the lower oil prices and it's extremely easy to work out their profitability at these levels.
For what it's worth I'd be very surprised if they need to do any more raises now before Fouke 3. They should have more than enough. They have two wells left to do at a an approximate cost of $326k. They've raised circa $600k. leaving them with circa $300k. The Fouke 3 well will cost maximum $400k but they now have 3-5 months of cash flows to top up the bank.
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