RE: RE: RE: Westfire's sure been a lame duck "we all know that this company has been using their credit facility to fund growth, and not cash flow"
Well, yes and no. It is impossible to use 100% "cash flow" in any industry (unless you're APPLE). In my business I try and use my credit facility to fund operations while we wait for money to come in from sales. I'm in the construction industry so we really have to stay on top of cash flow timelines ($ in) versus costs ($ out). I assume Oil and Gas is no different. It takes time (and massive Capital) do the consultations, drill, build pipelines and get oil to market. There is a time lag there whereby they spend $$ and do not get anything back just yet. This is what they have to manage. They have to manage this credit in relation to projected cash flow in the future (time value of money i suppose). I know that if I don't hit certain timelines to get a project donem then customers do not pay. Now I have to dip into the line of credit to pay for costs incurred, because the cash (which will come) has not been received yet. This is why companies that are not successful in finding oil and gas (or gas companies not getting their $5 an mcf) competely fail with huge amounts of debt.
These guys are playing with big capital numbers that I can't imagine - that said, if I recall (not sure what it is now with the increase), but their debt to cash flow ratio is healthy as a horse.
IMHO