Another major oil company walking away from VZ "joint venture"
Bad news for HNR's accounting team....Petronas has decided to quit the country with no compensation, not selling its assets. How long before PDVSA makes the capex call on HNR to blow them out of Petrodelta?
If you need money, what's better than selling the same asset twice?
(Reuters) - Malaysian oil company Petronas said it is exiting one of the biggest petroleum projects in Venezuela's Orinoco belt, after what sources close to the venture and within the firm said were disagreements with Venezuelan authorities and state-run PDVSA.
Many problems have been put aside by HNR, legally or not, but it will not be enough to make them disappear, all of a sudden and certainly not with this VERY suspicious "upgrade" from Wunderlich who is so tightly related to HNR by the past in my opinion.
Impairment of the Venezuela assets is only one worry but the immediate concern is the financing that HNR needs to avoid any payments default these next several weeks.
As I said, 9.7M cash end of June is now gone totally even assuming a 0 dollars capex if it is possible while they are acquiring some new prospect in Colombia.
I am not sure if HNR can use equity as a Banana Republic Currency anymore? After declaring inconsistencies and errors in their SEC filings they may have blocked them from using their inflated pps to get some cash at least for a year. I think HNR cannot file any 13G filing?
Not only that, but they got a brand new "going concern" which will deepen further the probability of a loan by any regular bank.
Now, how much HNR needs to survive until December or until Gabon farm-out may provide some cash if any?
Based on 18M to 20M per quarter and a minimum capex of 20M...HNR will need 40M. But if the cash gotten represents a "more than 5M sale" per the debt indenture then HNR will need another 90M to repay the actual debt plus penalty.
Now we are talking about 140M! This is a sale of about 35M shares of HNR and will double the outstanding assuming they can use their currency in a lucky case?
Gabon has hit a snag as you said most probably...something is not going as expected for HNR and I believe it is because they are not going to get much cash upfront. The project is too early and need more data and further drilling.
Anyone who invests in HNR should be very careful "hoping for the best". I think HNR is an excellent tool for day trade so but may collapse sooner or later without any warning. Many will wonder why they did not pull out the plug sooner despite obvious signs. oh well!