Aeris Environmental Ltd T.AEI

Cash Flow

[geomean]

While I agree AEI is bottoming, I wouldn't get too excited yet. It's net backs aren't anything near Grand's, and AEI said it's funds from operations was 1.8 MM in 1Q. Even if you add 500 BOPD for the behind pipe stuff its hard to get it above $0.10/FD share on an annualized basis. I don't see how one gets to $0.20 CFPS. Its CAP EX was 3MM last quarter, and if recall serves at SEPAC it said it plans to spend 27MM Cap Ex for the year, and drill 15 wells. It's revolving credit of 23MM is just about tapped out, and it's seeking a waiver/revision of one covenant there it is not in compliance with. I haven't determined how much is left on the last pass thru financing, and therefore can't determine what we might expect it to need to raise to meet its cap ex plans, so while it appears to be bottoming, I'm not going to get too excited and wouldn't chase it.