likelihood of a takeover of MEGlets put some probability numbers on this event occuring;
PROS
1-good long term assets with approved expandions to over 200,000 bpd
2-low annual capex for next few years to maintain production at 83,000 bpd
3-very low operating costs
4-good management team
5-a little more room to lower costs further in admin and head office
6-selling access pipeline to lower debt
CONS
1-highly leveraged
2-need plus 40 ,wti to break even due to high transporation costs and light oil purchases
3-high interest costs
4-no room to increase produciton as prices rise
5-selling access pipeline to lower debt will increase operating costs
I'm at 50/50 right now, I was higher but I have lowered it since the IMO announcement unless that is a ploy to keep MEG prices lower and the debt service costs would need to be taken over as well and maybe that would hinder buyers????
sure in a 50-60 WTI market the debt looks OK but by them MEG will be trading to 10-12 range and the low ball offers will not work any longer.
GLTA