RE:RE:RE:RE:RE:RE:RE:RE:in case you missed todays OBE plugConsolidation is not an end in itself; if there are rewards they will becasue of value. The issue here is the value that Obsidian's offer gives to Bonterra. I don’t think it is enough, and I know that Obsidian cannot offer anything more. Which also highlights that, although Obsidian is larger than Bonterra, it does not appear large enough, or healthy enough, to swallow Bonterra without choking.
The production metric will go up; that would be simple math; but the breakeven falling depends on detail we don’t know; and some more simple maths strongly suggests that any initial improvement would come from Bonterra’s numbers (pure Cardium) being much better than Obsidians (the drag of the legacy plays; where it only sometimes even breaks even).
Financing. I have real concerns that Obsidian could expedite banking sign-offs to close the deal; yet another substantial risk. Right now borrowing would be very much chicken-and-egg; banks want out; they want ESG; and they want to see results up front. You and I may be oil bulls, but banks are still, at best, on the fence. I doubt that there would be easy access to new money until there were a couple of quarters of demonstrated results and cash flow to support it.
Operations. Clearly there should be good operational reasons to consider consolidation. But lining up the numbers and structure to achieve this is more than that. In the back-and-forth on the offer, Bonterra suggests that they wanted to explore specific property deals that might offer advantages to both sides. Perusing these might have been a path to both building trust and repairing both companies to the point where a deal could be made. But that is not what we have here and now. Deals happen when both sides walk away with smiles. This one is hostile, and no one likes to be “compelled”.