Stella will happen...Ferret,
Financing is in place...
Unsecured notes for 300 M$ maturing in 2019. Holders of the notes might take an haircut but Ithaca is safe.
RBL facilityfor 610 M$ with a loan term in June 2017. Terms are as follows:
This increased RBL facility is based on conventional oil and gas industry borrowing base financing terms, with a loan term until June 2017, and is available to fund on-going development activities and any producing asset acquisitions. Restrictions on the previous RBL facility regarding the distribution of unallocated capital have been reduced, thereby allowing the Company to consider the optimal allocation of future cashflow upon the commencement of production from the Greater Stella Area hub. The corporate facility provides additional financial flexibility for the Company to continue to deliver upon its strategy of securing lower risk organic growth such as the acquisition and appraisal of undeveloped discoveries that have a strong fit within the existing portfolio. This facility is based on normal corporate debt covenants, relating to EBITDAX (“Earnings before Interest Tax Depreciation, Amortisation and Exploration costs”) coverage of debt and interest obligations.
IAE will pass the convenants at the end of 2014.
In any events, the banks are committed at this point with most of the funds have been used. It would be stupid for them to stop Stella. The banks, more than anybody else, need Stella to start producing ASAP.
For free cash flow in 2015 and 2016, deduct the 150 M$ in CAPEX and 50 M$ in interest per year. Still leaves you with more than 100 M$ in 2015 and 250 M$ in 2016 to apply against the debt. That will bring the debt down from 800 M$ at YE 2014 to 450 M$ at YE 2016. They do not pay any taxes.