RE:RE:RE:Art Cashin from CNBCoilsyd wrote: If this company is managed well (and I think they have a good team), then I do not see how it would be possible for this company to go under. They still make a profit on every barrel coming out of the ground. They are currently not making a profit because of the costs involved in drilling for oil to offset decline. If they scale back on their drilling program, they can avoid further debt. Of course, they will lose production and it will take time for them to get to back to 20,000 BOPD. This is the best solution for BNK because these low oil prices are not going to be around forever. A share issue is a possibility to maintain production (as TD suggested) but that is not good value for money when the stock price is in the toilet.
Maybe they will settle for a combination of increased debt and lower production, but at least they have options. The price deck chosen by TD was optimistic in my opinion so I find their target price ridiculous for a 12 month timeline. Based on current prices and their numbers, it would be reasonable to assume 27 cents cashflow in 2016, which makes the current shareprice a good entry point ( I have not bought back in just yet, but I am watching closely). It is also reasonable to assume that oil prices will start to increase before or in the year 2017. Can BNK survive another year? Absolutely.
But would the Albanian allow them to reduce production, thereby decreasing tax receipts even further? I imagine the company is under a lot of pressure not to cut production.
The company isn't being given for its operating results or asset base because the fear is the Albanians will just swoop in and nationalize it at some point. That may be an overreaction, but that's what this tax dispute has done.