RE:Cos/Mark/Gardiner/Holt/OE/Lina/Others...thoughts? Read all last night.. and my comment is.. that I wish I really had a spare $35M. Market Cap + Cost of few new wells would get you cash flow of $30M a year. Almost 100% annual return for.. what is it now.. 45 year concession.
Back to reality.. Agree with whomever said it.. Look at just the 3rd Q, Add back depreciation of 6.6M to loss of $3.6M and you have cash flow of $3M for the quarter. Really too bad that they did not report quarterly cash flow, just the 9 month cash flow. 9 month cash flow has drilling time and costs from/in beginning of year. I would expect that this quarter will be rate going forward.. so company will have enough cash and cash flow.. just not enough cash at the right level of corporate structure.
So, company has $3M a quarter cash flow which will be kept in MMR account as required per contract..but Corp level debt is problem. What upsets me.. is that we were told that company had enough cash to pay 12-31 Corp debt service.. now we do not.. something like 1.7M in free cash at 9-31 at corporate level and need $2.1 for interest payment. So....
Seems like they are getting ready to sell the Imperial Valley prospect for ??? or whatever they can get and the steam turbine for $1.5m. Great.. fire sale of assets to keep running, all because they did not budget over the years, too many projects, none completed, now fire sale to get one SJE project complete and in compliance and running long term. The 50M spent on Geyser or $XXMillion spent on Imperial Valley sure would have helped SJE now.
Seems like Nic Gov and bankers are being accomadative.. extended concession and no default on debt and gov lowered threshold to 45MW for concession. Thanks. Just hope our own directors and debt holders will be as respectable as Nicarauan officials.
I still go back to my original suggestion.. if the holders of corp level debt would take Payment in Kind for 2 years, SJE could have cash flow to develop the 2 to 3 wells that are needed to get to 72MW... and all would be great for shareholders. This thing could be .50 a share.
The holders of corp level debt are same pricks that are running the company.. I am not holding my breath for them to do the right thing.. but it sure would be nice to have honest management. Now I see why we need class action suits against management.. this would be one instance that I could support.
There is very litte loss/rights given up by corp debt holders to take PIK vs cash.. heck, like I said if I had $35M..one could pay the corp debt interest and fund drilling and buy company at market cap. I would do it .. and reap an almost 100% annual return.
My faith in management is low.. so somewhere between my PIK idea (.50 a share) and we get diluted out by JV .05 to .10 a share) to screwed by corp debt insiders (at .001 a share) is where we are headed. My bet is still a JV and .07 If stock drops below .01 I may even get a few more, we shall see.
Good luck to all...