MMT - re-run at crisis prices and triple gain poteMMT Synopsis - worth a repost, taken into account that they will have around 15 mln cash now and with 6 mln cf/month we're talking 0.26 cents cash per share 12 months from now. And that's when nothing happens. They will drill and will hit as it's a proven reservoir.
General:
• Positive Working Capital – just about, but this will increase every month
• Production november 3785
• Light 48 API oil (71$ average price last Q) – this is very good quality with a premium to Brent
• UMU contains 16 know reservoirs of which only a few are tapped in – full field development is estimated at 15.000-20.000 bopd
• They are building a permanent Central Production Facility that has capacity for above production but even more, to benefit from a secondary tariff revenue stream – this will substantially reduce opex
• 22.8 2p Oil Resreves at UMU and decline rates are slow so this will get upgraded significantly in all likelihood – and certainly during drilling
• G&A is substantially reduced
• Legal costs are going down
• RIG service costs will go down, there’s even revenue now
All this shows good progress and focus on the right things: focus on cost reduction and near term additional production.
Debt & Costs:
• Opex $16.5/b
• Debt $ 14.9 mln end of year $ 12 mln as they need to pay $ 2.9 mln
• Payables Sept. $ 19.2 mln
• G&A $ 2.4 mln in Q3 – 400 k was legal costs, which will go down
• $750 k interest costs Q3
• $850 k RIG costs Q3 – will assume with reduced income and the 500k income per Q this will be reduced to 0
• Have paid back the bridge loan + interest $3.7 mln
Income:
• 5.4 mln cf p/m at $70 oil: 3700x330 daysx(70-16.5) divided by 12
• RIG lease income $165k p/m is 495k p/Q – plus it will bring down RIG service costs
• RIG jury awarded of $1.5 mln – will assume this will get paid by Jan. 2010
• Sept. Cash $8.9 mln + $8.7 mln receiveables from Aug/Sept + $1.7 mln left in receivables
• Oct-Dec oil production at $70 oil is $16.2 mln
So by January we will have the following situation:
Cash: 8.9 cash + 10.7 receivables that will have been paid + 16.2 Oct through Dec oil production + 1.5 legal award = $37.3 mln
Costs: 2 G&A (took out legal costs) + 0.75 Interest + 3.7 bridge loan + 2.9 debt to pay = $9.35 mln
Free Cash: $ 28 mln – let’s assume they pay $ 10 mln of accounts Payable that still leaves $ 18 mln to drill and bring production online with a continous cf stream of more than 5 mln per month.
R.