good and badI agree there are lots of good points from this corporate deal or whatever it\s being called and yes it will certainly help MEG in the longer term, to increase produciton and lower costs and make CF, BUT and big BUT
I also think this was a deal of last resort because they have been talking to many companies over the past 2 years that started with access sale process and not one company made any advances to either offer a fair price for access or sign a JV deal or a company buyout.
MEG will now trade with oil prices but in a lower trading band in 2017 since not much is really going to happen now besides spending money to increase production that will effectively only show up in the late 2017 and h1-2018.
i'm just guesing but I think MEG will trade under it's offering price at some point in 2017 and the new upper limit will be 8.00-8.50. considering diluition and the debt still being as high as it is. Don't forget the debt is still high and the debt service costs are still high.
basicially they got some breathing room to increase produciton and hope that oil prices can stay above 50 wti in 2017/18.
of course once they increase production and lower costs they can make CF free cashflow but they still need 60-70 wti to really start churning out cash to pay down debt.
on the downside I can see MEG going back down under 6 if oil prices fall back under 40 wti for whatever reason.
USA oil and liquids production just went up 176,000 bpd in the last week. To me that means we won't see 60 or higher for a long time.
of course I'm just guessing and speculating DYODD