You have to believe what they say, since it has to be true information......its what they don't say that we should all be worried about. I have much less faith in those on this site than I do management. Especially people who over use the word ONLY.
I don't think you're interest expenses are accurate, and I believe you are double counting the operating expenses against the budget. I keep hearing that debt is the best bet, but its tougher to get out of that trade and make money if you needed to. Why would anyone buy the debt just to go through the BK process? They wouldn't, they would buy it for appreciation. If they do buy the debt, and the debt appreciates in value.....what do you think the pfds and the common are going to due during that time? a lot better. All plays are risky, but if you want appreciation potential with liquidity....the bonds are not as ideal. Of course, IF this company goes BK maybe you want the debt....but you can make a lot of money between now and then. This debt financing just bought time.....according the JJ, at least 6 months more.....you can make a lot of money in 6 months.
All I can take away from this past week is that GDP isn't in as bad of shape as JJ and Flip would like us all to believe, that's not to say that they are wrong in their predictions. At the same time obviously the company isn't in as good condition as most of would like. As soon as oil crossed the $80 mark the question of whether or not prices will increase back to $100 and when became most important? Either prices will normalize and go back up in a matter of time, or they won't. If they don't, improvement and effciencies in technology will be required to bring down production costs. This debt restructuring buys time, and time only helps GDP. They can only go BK when they run out of time. So this week was a win.
Not to mention that the company was valued much more when the reserves were much less...and it isn't just oil price.
Flipper, the company has value for reason beyond just their reserves. I am not disagreeing that the information you point out is bad, it just doesn't prove the point you are trying to make....and make people feel stupid about.
we will see shortly, however please compare when they paid the dividend last year at this time. Why would you compare anything else? Last year they made the declaration AFTER earnings...
The fact that they are able to borrow makes them strides better than any of you have been willing to admit.
So if what you say is true regarding the IRR and their "break even" of $50...and I don't doubt you....I just can't figure out how you came to a conclusion of a REQUIREMENT of $90 this year and $120 next year. Those figures seem made up. Using their daily production and assuming $70-$80 average over the next 2 years, I just don't see how this company fails in that environment. $50-$60 for the next 2 years...sure....but any higher an GDP will prosper. If you care to share your math, I am willing to learn.
You will get very close to par somewhere between 85-95...from what I see.
That's because #$%$ stock or bond holder, no one wants to go through the BK process. From what I see, Bond holders would recoup most if not all of their investments.
I read in the prospectus that if the common is below something around $10, the preferred C and D would only be worth $12.50 in the even of a takeover/merger.
My conclusion would be that the operating liabilities would far exceed the operating revenue being generated at this point.....thus selling the asset would have more impact on their annual budget than previously thought. Yes, you could say that the value of the assets sold would drop at the same time, which it would, but the sale of assets would create short term liquidity regardless of the amount, while dramatically impacting the operating budget in a positive manner.....allowing GDP to wait it out. All I am saying is selling EFS isn't the end of this company, quite the opposite....
Jim, you can spat out information well, but unfortunately your information slanted to reflect your opinion and not the facts....even if you do understand corporate finance. What percent of liabilities do they save selling EFS? (hint...its more than the revenue they lose)
If investor relations actually told you that information regarding the 20th of the month....then at this point they violated the insider trading laws.
There is no public information out there stating that the dividend should have been declared by the 20th, thus the moment that day passed you would have been privileged to information that the market is unaware of.
I do not believe investor relations told you what you are stating, or else there could be bigger problems for GDP with an insider trading investigation. Plus, they will have to address this issue of the preferred dividends on the 27th during the conference call, won't they? How can they declare the divided after it supposed to go ex? The dividend goes ex on the 1st of March according to the prospectus.....
just imagine if our feds QE3 program was redirected at the energy producers......we were purchasing 80 billion per month in real estate.....all we would need is one months worth to support the entire US producer sector for the next few years . Energy costs would drop dramatically for a period of time until demand went through the roof. The economy would be en fuego, jobs would created instead of lost and we would be in control of our owns country energy dominance.
CROWN JEWEL? This "crown jewel" equated to about 20% of GDP's total production/revenue.....the part that no one is talking about s that it also accounted for nearly 40% of the total liabilities of GDP. Selling this "crown jewel" will immediately bolster the balance sheet by 20% on-going, never mind the liquidity that will be injected into the company. The companies future lies in the TMS.....there's more oil there and they have a larger competitive advantage in that region. Yes, oil needs to go higher or else the company will fail....but the company is taking the right steps.