Chinook Energy Inc. Common CNKEF

RE:RE:RE:RE:CKE just distributed 6,450,000 shares for $2 Million raise

[bouquets]

CF.  I think you've hit the nail on the head (or perhaps several nails).  To this, I wonder whether there isn't one more relevant fact.  If I recall, a condition of Chinook's new credit line is that in order to take any of it, Chinook has hedge its production.   From the 3Q MD&A p. 15):

 

Also the terms of our debt facility agreement, if we have net debt or debt draws of either up to $9.0 million or in excess of $9.0 million, requires us to enter into commodity price contracts covering no less than 30% or 50%, respectively, of our forecasted twelve month combined production volumes. Meanwhile, its current hedge is expiring at the end of December.

Could it be that this $2m is being raised so that Chinook can remain in the black enough to avoid having to lock in its production at a bad price?

CanadianFemme wrote: I agree with you both. To me it's not so much the size of the dilution but that they had to do it at all. It shows a little into the company psyche and what may be going on over there.

We all knew from their latest quarterly report that their balance sheet was going to be approximately $2 Million in the hole at the end of 2017. There was much speculation on this board as to where that money would come from. Most of us thought they would tap into their newly expanded Line of Credit of $18 Million and begin to take on debt. Heck, even I thought they would do this because in the 2017 Annual Shareholder meeting, the CEO explicitly said they would rather take on debt as a last resort than pass on any more dilution to shareholders who are already in pain. Yet here we are at the end of 2017 and they've decided to dilute shares and not to take on debt after all. 

So now 2018 gets interesting. If the Station 2 prices continue to stay abysmally low in Q1 I think they have 3 options:
1) Take on debt to grow production
2) Shut in production until prices improve
3) Sell additional assets to raise funds for production growth. But this is highly unlikely as I think the majority of their remaining assets are core and strategic to their growth, not sure they have much left to sell.

4) And of course as one constant pumper *cough no names cough* continues to tout on this board, there is the 'pie in the sky' option 4 which is they might get acquired for a hefty premium soon *rolls eyes*. Unfortunately the financial facts state that if there were indeed a REAL suitor on the block, Chinook management would know this and not be scrapping for cash through FTS distributions. So anyone waiting for a buyout should not hold their breath. All the potentia suitors know the NG situation in Western Canada and can easily wait until the juniors are ripe for the picking.