RE: Financing ComingBUK is currently negotiating a project facility, also known as debt financing, for Durango.
People get all scared with financings now a days it starts getting a little pathetic. Considering that not one energy company, with reserves in the ground, has been rejected by a bank for debt to develop fields to date. So it will not be a problem to get debt to finance a proven field.
The main thing here is to bring Durango into production sometime this October, only 4 months away, and milk it for $500K/d at current UK gas prices.
Between now and then BUK only needs $ to drill N. Piper.
25%WI (for 37.5% of costs) has already been farmed out and management stated in the April 17 NR that they were looking to farm out another 25% to bring down their %WI to 50%, while still being the operator. If they can get the same deal as their 1st 25% farm out then BUK would only be on the hook for 25% of the first N. Piper well costs, or US$4.1 million net (US$16.4 million gross).
The company will not issue a ridiculous amount of shares and dilute shareholders to death. Remember that management are large shareholders as well and they do not want to kill the company b/c of that fact. Why would they do this when they really do not have to? If CF were not on the way then they would not have a choice but to go this route. But that is not the case with BUK as CF is just 4 months away. At worst you do nothing for 4 months and save your self a huge dilution until Durango produces. Warrant $ and CF from Durango is all that is needed after to drill Aspen and other targets going forward.
Why would they need to go out and raise say $100mm when all they expect to drill for the remainder of the year is N. Piper and possibly Aspen? Both combined gross drilling costs would not add up to even ½ that amount and Aspen is suposed to get drilled in late 2008 after Durago is already on production and generating $. It makes no sense to raise such a large amount when you do not need it and when CF is just around the corner. That would be diluting for the sake of diluting.