RE:RE:RE:RE:RE:RE:RE:Depletion and depreciation No Green I'm not in, I was thinking of it but a few items in the financials have me a bit leary.
The first is that they are not compliant with the debt covenants on this facility which is why they must make payments of 300,000 per month, unfortuantely since it is a noncompliant facility this money is not available later should they wish to use it for drilling.
You keep refering to debt reduction and citing that payments to this facility indicates that all is well when nothing could be further from the truth.The fact is that payments to this facility comes from money which should have been used to pay current accounts payable and accrued liabilities. Unfortuanately this balance sheet item has been left to balloon and will continue to do so until such time as the remaining 1.4 million is paid off on this facility.
Of special note with respect to this facility is the following:
The Company has granted security, which contains a $25,000,000 debenture with a first floating charge over all assets of the Company with an undertaking to provide fixed charges on the Company’s properties and a general assignment of all amounts receivable by the Company.
Secondly in view of these particular debt covenants there is also the additional constraint placed cashflow by directing WH revenue toward offsetting the costs of upgrades which when combined with the loss of revenue for the construction period due to the neccessay shutting in of that production means that they have very little room to manuveur.
I'm not sure how they intend to finance the drilling at Kerrobert but things could get real dicey if the do not achieve 100% succes with all their plans