They are almost finished drilling I believe. Dist might bounce next quarter only because target (sub 80%) is still climbing but more and more this is on the steep side of the decline curve. But with subs, dist should remain about 50-60c until 3/15 when it will get clipped 50% to 25-30 and then decline 4-5% per annum....basic physics (geo that is).....unfortunately, means PV-10 is close $7....
You are not considering the fact that distributions will drop significantly after the end of the subordination period and will keep declining after that. You WON'T be making 15% on your cost basis after a few years from now, it will be far less and lower with each subsequent distribution. You really think it is that easy? If so, it should be a clue for you that there's something you are not considering or aware of.
I think there is wide spread misunderstanding about the subordinated issue. The issue is already being paid a distribution so what is going to happen is the subordinated is going to go away and it is going to be converted to a common. It is a not exactly a dilution of earning but a one for one exchange. The subordinated distribution money will now be paid to the common. It is not a sale as some have said on the board it is an exchange. An issue that does come into play is that there is currently a floor on the distribution to the common funded by the subordinated. If earnings don't produce enough income to satisfy the floor then it is satisfied by funds taken from the subordinated. That came into play this quarter because the income came in low. After the conversion, their will no longer be a floor on distribution.
Lisa........ i am not sure the distributions will drop "significantly" after the subordination period as SDR needs about $27m of quarterly earnings to pay a 54 cent dividend on the approx 50m total shares (common and subordinated that become common). This quarter, it earned $26.5m. If they can continue to earn around $27m, then the distribution will stay around 55 cents. However, I do agree with you that the distributions will drop, but as a result of reduced production, which seems to be already occurring. If they don't earn at least that $27m next quarter, then this won't even be worth $10.