RE: Financing“for those of you who where in Oilexco at $ 1.50 will remember they needed financing before going forward and BUK will surely need the same.”
I watched OIL since it was 30 cents and owned it since a $1.00 and there is a huge difference between the two at this stage. OIL needed $ to appraisal drill Brenda at that time. At $1.50 there was the original discovery well and the 1st appraisal well (15/25b-6 well) that OIL drilled, nothing more. It took about 8 total wells (sidetracks included) into the play and almost 2 years to fully delineate it. 2 years with no production and just expenses is not the same boat that BUK is in at this time as Durango is to flow in just 4 months with 1 more exploration target to fund (@25% of costs) between now and then.
Banks won’t give you a dime to drill anything other than develop drill and get infrastructure. Exploratory and appraisal drilling are done at your cost not the banks as it is too high-risk for them. So OIL’s only way to go was to raise a tone of $ through equity financings through Canaccord. For them it was even worse b/c they eventually committed to an initial 2-year term for the Sedco 712 rig at a US$140K/d initial rate and later extended that contract for another 2-years at near $250k/d. It was a big risk for OIL at the time. From the time OIL went from Brenda appraisal drilling to production they went from 30 mm shares to 240 mm shares (diluted) in 3-4 financings over that time. BUK currently sits around 150 mm (diluted) with good sized CF just around the corner.
Durango is a development project. They will can get debt financing for pipelines, pumps and whatever other infrastructure they need, just like everyone else does.
“If you read the Blackmont report it is made quite clear that as of last Sunday they needed to commit to the Chevron rig or they would not be able to drill the Piper until next year. The commitment to the rig was dependent
on cash which they did not have available.”
No offence, but I really don’t give a dam what Blackmont says about a Chevron rig. If 2t3m’s post was true (and I have no reason to doubt it) about Ed Davies’ email stating that N. Piper is expected to be spud July 24 then that tells me that the Stena Spey is our rig after IAE is done with it in late July. Past BUK NR stated that was our rig and that new spud date, in that same email, BUK’s CEO stated was dead on with the timeline that IAE’s CEO stated that they would be done with the Stena Spey rig.
You could be right about the financing as my guess is made on assumptions just as others on this BB. No one actually posted what they have remaining on their current balance sheet. To say “I think the well cost this amount” or “they need money b/c there was an overrun” is not a very good way to calculate anything. Without any numbers it’s nothing more than an opinion, mine or anyone else’s. And opinions don’t mean anything b/c everyone’s got one, and not everyone can be right. All I know is that they need an estimated US$4.1 mm net to drill N. Piper and that’s not a lot of money. They are about 1 month away from drilling that well. Common sense tells me that they would first have $ on hand prior to locking down a rig as that is how it is usually done. But who knows? Maybe what lancer99 is hearing in terms of floating a convertible debenture is correct and BUK does things a little different in terms of timing. We shall see soon enough.