Delphi Energy Corp. DPGYF

RE:Remarks for Q1 2017 on leverage, costs, 12.8% interest rate

[tickerprice]

I agree with your comment on the leverage based on Q1 cash flow. They do need to show some improvement in production volumes or the cost structure so as to increase cash flow towards lowering the leverage ratio. Q2 prices have been lower than Q1 with two rigs still drilling in Q2 and no more carry dollars. They speak of volumes being at 10,000 boe/d so that should help. I disagree with their comment that the first quarter capital was partially funded by the carry capital. All the carry capital was accounted for in 2016 by reducing 2016 capital and hence net debt at year end. If it reduced last year's capital how can it fund the Q1 capital program? Transportation charges are high because of their commitment on Alliance to deliver their gas production to Chicago and are difficult to reduce due to the take or pay nature. The benefit of that is that the sales price they receive for their gas is higher to offset it. I'm sure they didn't want to enter into 10% debt last year but maybe that is just what it took to get it done. AGM is this week. Planning on attending to get an update on their outlook.