Eagle Energy Inc T.EGL.UN

RE:2018 hedges?

[OOU812]

OOU812 wrote: It looks like Eagle doesn't have any hedges for 2018.At the moment hedging gains are making up half of their cash flow.If oil prices don't improve, 2018's cash flow could be as low as $5 mil.
I hate to see how many covenants that would trigger.

"Consolidated leverage ratio: As at the end of each fiscal quarter, commencing with the quarter ended June 30, 2017, Eagle is to maintain a consolidated leverage ratio of not greater than 3.50 to 1.00 for each fiscal quarter ending on or prior to Dec. 31, 2017, and a ratio of not greater than 3.00 to 1.00 for each fiscal quarter ending on or after March 31, 2018:

• The consolidated leverage ratio is defined in the loan agreement as the ratio of consolidated funded debt to consolidated adjusted EBITDAX (net income before interest, taxes, depreciation, depletion, amortization, or other expenses, gains or losses that do not represent a cash item) for the trailing four fiscal quarters;"

Next year's consolidated leverage ratio covenant will be lowered to 3 to 1 instead of the current 3.5  to 1.Based on $80 mil of debt that would require $27 mil of yearly EBITDAX.
If oil stays at WTI $45 usd, their EBITDAX will be around 1/2 - 2/3rds of the amount  required.
For White Oak to raise the covenant by 10% is one thing, but 50-100%, I have my doubts.
The selling of properties is not a question of if, but when.