Production is 6BCF+ per year (no new wells drilled) + 120,000 barrels per year (last run rate I saw, more
info on current and future expansion to be given at 3/5/13 on the conference call) and still left with
hedges of two years of sold production (did not find it at the list of items included in sale).
1 access to the Osage concession (560,000 acres), 80,000 acres held by production, 24,000 of which
have all rights.
2 cherokee basin land of 200,000 acres outside of the concession with full rights (can not value for oil
purposes - not enough information).
Bank debt - $34M
Cash - $12M
Excess Hedges - 85% * 7.6BCF = 6.4BCF * ($5 - Average current Nymex 2013-2014 forward price of $4)
= $6.4M - liquidation discount = ~$6M
On going expense rate is a big question mark...
Conclusion: the phase of survival is almost over. the debt is now modest and the question is how to obtain
the money for oil exploration expansion.
Good luck to cep and to us.
If they can not get new money for increase of their oil program, they will run the clock out and either postrock will take over or someone else will come in and coordinate something with postrock.
The managers here are not dumb at all. They have survived without massive shareholder dilution and I am
sure they have an idea, because the new production base (as is) will not sustain high overhead and the
concession terms for osage will finish at 2020.
Anyway, it should be an interesting 12 month going forward.
good luck to us and to the company.