With their release of dismal earnings this morning and their announcement they are going to be looking under every stone to cut cost, I am sure they will be approaching PACD for renewal of their drill ship contracts at a lower rate.
Nice production growth. Their hedging program pulled them through looking at the EBITDAX recon provided in their earning release. Otherwise, with no hedges they would of reported a huge loss.
Debt increased from 1 billion at start of 2012 to 4.7 billion currently. Will need those hedges to pay all that interest on their debt. Mgmt never talks about this debt in their presentations.
With 2 ships without contracts, the Pacific Khamsin contract to expire in 7 months and the new ship (Pacific Zonda available in 4Q 2015 without a contract, this will be half their fleet without a contract. Cash flow will dry up, bankruptcy is a possibility in 2016. The market realizes this and that is the cause of the stock drop.
Trust expires 3-31-2031. After March 31, 2015 there are no hedges in place and with the low oil prices distributions will be cut sharply.