OTCPK:ARNBF - Post by User
Comment by
hardeeharon Jan 16, 2014 12:37pm
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Post# 22099489
RE:RE:update
RE:RE:update Why the sell off you ask? In a nutshell Arcan has a huge debt burden that is unsustainable, and after 6 months since they first announced their intention to sell their DM2 property, it has not yet yielded any results.
Absent of any sale of DM2 and with no production growth Arcan's DB/CF ratio for 2014 will be going through the roof at over 8X. If they can't find a buyer Arcan will be forced to sell DM2 at a distressed price just in order to relieve their high debt burden. Not a good position to be in as potential buyers realize Arcan's predicament and will wait it out until Arcan has no choice but to sell DM2 at firesale prices.
Pinecrest Energy's announcement of a drop in their production guidance yesterday didn't help either...the company is similar to Arcan with respect to geography & waterflood programs - and a high debt load. Pinecrest stock dropped 40% to 20 cents on the news. Arcan would not be able to survive if they encounter similar production problems.