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Constellation Energy Partners, Ltd. Şti. Message Board

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  • rrb1981 rrb1981 Mar 8, 2012 9:56 PM Flag

    4th Quarter Oil revenues surged to 18% ...transition to OIL company underway


    Are you serious?

    CEP will be doing good to reduce debt by $10-$15 million next year. They plan to actually keep production flat in 2012. The bulk of the hedges have been monetized and they still have $90 million in debt.

    These guys need a recap. They could get by with $75 million.

    If you look at the Q, you will see that their lifting costs, SG&A and ad valorem and production costs are greater than the market price. Throw in unfavorable basis differentials for good measure.

    CEP needs a recap, then they can focus on oil and liquids rich production. The problem is with their existing oil assets, they have very few PUDs. It was mostly PDP if I remember correctly.

    Right now, just about any E&P can survive if they put their money into oil and hedge out 4 or 5 years.

    Essentially, all of CEPs cash flow from hedges will go to paying down debt. Once the debt is paid down to say $30 million, CEP's hedges will be gone and they will not own much of value other than you have a corporate shell.

    The cherokee basin assets can be milked if gas ever climbs back towards $5/mcf, but that seems unlikely.

    Make no mistake, CEP is dying a slow death until they recap and time is running out.