So production was 2,566 bopd in Q1 and averaged 2,772 in Q2 through 6/3/14. However Q2 production will average above 2,772 since A-21D didn't come online until mid-May. Seems to me that production is headed in the right direction. The gains are going to be uneven as wells come in. Some quarters it will go up a lot and other quarters more modestly. Clearly headed higher though.
From the 6/4 operational update:
Second quarter 2014 gross production from the Block Z-1 development drilling program has averaged approximately 5,435 barrels of oil per day (bopd), or 2,772 bopd net to BPZ through June 3, 2014.
The new A-21D development was completed in mid-May 2014 and the well has averaged 885 bopd gross, or 451 bopd net to BPZ for the past ten days.
Production up 72% in Q1 from prior year and we'll see more big sequential increases in Q2, Q3 & Q4 as Pacific Rubiales continues to hit some nice wells. Hey Avi, you must be reading the production chart upside down. Turn the paper over you #$%$
From the Q1 earnings press release:
The Company's 51% share of oil production from the Corvina and Albacora fields at offshore Block Z-1 for the three months ended March 31, 2014 was 231 thousand barrels, or 2,566 bopd, compared to 134 thousand barrels, or 1,491 bopd, for the same period in 2013. The increased oil production is a result of the reinitiated drilling campaign at Block Z-1 which began in the second half of 2013
The KeyBank credit line is well under 10%. This is a 250 mil credit line which is currently capped at 60 million. As production continues to increase, the borrowing base will be increased lowering their overall cost of funds. Mill-pc and MIll-pd (just over 10%) are trading much higher than they were a few months ago. In fact mill-pc is trading well above par and can be called at par on 10/1/2017. The cash yield of Mill-pc is slightly above 10%, however the yield to call (which is the correct yield to look at in this case) is only 9.3%
Interesting to see the shorts still trying to claim Mill is about to run out of cash any day now - LOL. This is coming from the same folks who claimed that Mill wouldn't close a bank credit line, which of course they did. Here's from Brawley's presentation on the conference call:
We currently have approximately $14 million of cash, we have $30 million available to draw under the revolver and we expect to receive another $20 million in tax credits in August. So we have approximately $64 million of near term liquidity plus revenue.
Mill hasn't sold common shares in years, other than mill-pc which is convertible to common at $10. The banks said no? Well actually they have about $30 mil (if I recall correctly from the conf call) currently available on the bank credit line which can be drawn at any time for any reason. You say that unfortunately the common subordinate to the preferred? True, but misleading. The preferred issues can eventually be called at par. They don't dilute common like selling more common equity would. If Mill hits some big wells, the benefits will accrue primarily to the common holders - not the preferred holders.
I've traded enough distressed companies to know that they will delay the reports as Doral is doing while they are contemplating a restructuring. Sorry that me pointing out the writing on the wall is annoying you. Since I supposedly don't understand GAAP accounting, please put me on ignore and double-down on your position.
Sam, that would make sense to maximize near term production. However, I think we will see Mill stick with their strategy of maximizing reserves and Alaska rebates. If they get a 60% rebate for drilling into a new fault block, it's hard to argue that's a bad decision.
They could sell the rights. It was discussed on the last call. As Tsar pointed out the asset sale increases the amount they need to raise. The uncertainty and politics would also tend to discourage any potential buyers.
Robert, the fact that they still haven't filed the Q1 report is troubling. It's another reason why I won't trade the issues even though court victories are very likely. My viewpoint is that they are avoiding filing anything to reduce the risk of shareholder litigation if they later file a pre-pack. Any legal disclosures in the report or conference call could provide ammunition for lawsuits. I guess the lawyers are telling them its better not to file at all.
Updating equity holders is a very low priority at this point. They are concerned more about lawsuit avoidance. I suspect they are trying to file a pre-pack near term. Never mind the regulators or the courts. Worry about what management is up to!
Sam, do you think they should put a second rig on the platform? RU9 seems likely to be a good well, but has taken a long time to drill. Perhaps they need a 2 rig strategy on the platform. Use the current rig to drill stuff like natural gas, disposal wells and reworks closer to the platform. Get a new rig that can do these "extended reach" wells faster. Seems like they have many years worth of targets on the platform at the rate they are drilling. At the current pace they might do 3 RU wells a year if we're lucky (probably less given the need for the rig to do other stuff as well).
Well exuuuuuuuuse (spell check that!) me for the typo. As an investor I don't worry about whether they got a new credit line from Keybank or Keybanc. I said they would close a bank credit line and they did. Some posters such as Verado said they wouldn't. Looking at well results from the 1960's to draw conclusions about wells being drilled with modern technology is not smart. It really is like saying that calculations are impossible (even with a modern computer) because they couldn't be done on an Abacus. I stand by the comments.
Robert, the short answer to your question is "No". Management has made it clear that they would prefer to "restructure the balance sheet" rather than sell the crown jewel mainland operations. They would rather lose equity holders than lose that operation. But let's pretend they wanted to sell it, but retain some control. That wouldn't work. In the FDIC regulatory world if you control a bank you are responsible for losses of all related banks (and vice versa). The FDIC can go after the holding company of a bank for more than the value of it's equity controlling stake in that bank. If you sell a bank but still control it via options, those cross liens would most likely still be enforceable. The regulators have taken a rather expansive view of how they can enforce cross liens.
Cross lines make even a very clean sale of a profitable unit very complex. The buyers would want cross lien waivers from the FDIC to ensure that the buyers are not responsible for losses in PR. The FDIC might not want to provide them such waivers. As I've mentioned before, the regulators are basically a bunch of Vogon trolls. If you expect and count on them to impede the recovery process for Doral, you won't be disappointed
fp, I think there is a 99% chance they will eventually win in court unless PR settles first. How impatient the regulators are is a concern. You are also assuming that management will be patient (assuming regulators are) as things are being litigated. They already warned you in May that they might not be:
(2) Doral may not be able to effectuate the recapitalization and restructuring plans that Doral believes are necessary to comply with regulatory requirements or Doral does effectuate such plans that Doral can restructure and recapitalize its balance sheet and businesses on terms that will preserve the value of its outstanding debt and equity.
Fair points Tsar. If the Court moves faster than the regulators, you are likely to make money. If the reverse happens, you will lose money. Both the courts and regulators are difficult to predict. Staying on the sidelines on account of that.
Yahoo shows only 2% of the float is short. It is funny that people see shorts behind every trade.
Disc: Took profits awhile back. No position.
Seems like a decent trading plan Tsar. I think you are right that they will win in court and the court is moving about as fast as courts can move. My take is that the regulators are really putting the screws on Doral though. I don't even want to trade on the likely court victory until I see what happens with the capital plan deadline.
They need to file a capital plan before the end of the month. It's not a question of shareholders being impatient, it's a question of regulators being impatient. It would be nice if the regulators said, "sure take your time and take a couple of years to get back to well capitalized as long as you are making progress. We'll do our best not to hinder your profitability and liquidity in the meantime while you work towards that goal". Unfortunately that's not what's happening.
I think you have it backwards. DRL is winning every battle in court. PR blatantly violated the agreement and made up "legal" justifications to try and justify a political decision. I assume DRL will win in court. The problem is that PR can then still appeal further as you've pointed out. This illustrates why DRL shareholders desperately need PR to settle voluntarily (no appeal). Unfortunately I doubt we're going to get a settlement. I guess it's good politics to go after those "Wall St. Millionaires". If you own a few shares of DRL, guess who that is.