RE: Califdreaming...You sound like a real pri@K!You aren't really grasping the situation here are you!!
They had to raise money because they did not have enough funds to drill the Piper. Have you heard of any partners yet on the Piper well? No, you haven't. That means that BUK at this point, is 100% of the play at the moment and had to provide Chevron with the entire deposit on the rig.
Cash flow in Oct./Nov doesn't help as far as drilling the Piper inJuly. Failing to raise that capital would have put the Piper into thenew year. I expect them to have at least one JV partner if not two but nothing announced so far.
When you still owe $15 million for drilling the Durango and your line of credit cannot be used to pay that bill since it is dedicated towards infrastructure it puts you in a bit of a tight situation - you have to raise cash and you have to do it in the context of the market whether you like it or not. They are in negotiation on that debt since some of it is in dispute but they will owe a chunk of it when the day is done. This is also the same driller that is suppose to be used for the Aspen so if matters aren't settled the Aspen may have a later start date.
And yes, the warrants have to be issued to sweeten the pot. In case you hadn't noticed the market is in the tank somewhat and institutional buyers, who were the major purchaser's here, will not buy a straight equity issue and hold the stock for 4 months without some add on's. However, this time it was only a 1/2 warrant rather than a full warrant as it was in December when the instituions placed very very little of the stock sold. The mass majority was
retail then and they were unable to max the issue due to market conditions.
Risk is a matter of perspective and most shareholder's don't short stock. So keeping that in mind, should the normal guy want to have 4 month paper which overlaps the drilling? The risk is signigicant. It did not work out very well for the GUL shareholder's last year. An .80 or .85 unit now at .10. That is not to say that BUK won't do well over the longer term since they already have Durango but why do you not want the freedom to be able to trade the stock if it moves on the speclation of Piper rather than being tied up for 4 months?