right, so they are going to need 200mn or so plus the usual 50 for other capex next year. Their current revolver has enough room and, in theory, they can secure finance these purchases within the sub and borrow at say 5% lever it up to get 20% on the equity side.....in theory of course....and like stated on the other thread, if futures curve lower, we are going to pay less ...market doesn't want to think that XCO is short oil at the moment (but long NG)
u mean drilling return (i.e. 20% over year one). XCO only pays for 25% of upfront drill cost then buys at PV-10 one year later.
Well buying PV-10 is not a great deal to begin with but loosely speaking, lower spot and front months and the more backward, the better for XCO. If it gets too low, then KKR does not have to accept which might be considered a blessing. So "optimally" would be like 85 spot and 70 on the out years. Then u'd be getting them cheap. In effect, XCO is short oil forward. Be glad xco didn't have to buy them back in June when contracts were 100+ out a year.
oddly, the current front month futures is basically back to where it was (of course, it wasn't front month then) back when they did the deal. so kkr shud get there 20% and xco shud be able to buy these at current strip pricing....whether that is a good deal, only time will tell
that is incorrect. xco must make an offer. kkr does not have to accept if they have not achieved a 20% 1 year drill return
tangible is $10/share so market trading at a big discount. or Maybe reserves are priced using past oil/gas prices vs futures curve looking forward. Hard to believe the market is blind, right?
well - u just don't default out of thin air. Even with KKR payments and assuming gas stays stuck here in the mud, they will need to borrow about $250mn in 2015 to support KKR buys and capex. The end result will be 500 out on 850 credit line by end of '15, ebitda in the 450 range and leverage in the high 3s. No picnic mind you but not BK. Then in '16 the KKR flows start to work more in XCO's favor with some actual oil production. And that is using 4.25/85 .. so i think you are overstating BK
What they just declare we are bankrupt. Don't they have to default somehow or break a covenant? How do you forsee them running out of cash by Q2?
well if so, it will take quite a few years plus they would have to neglect their fiduciary duty to common shareholders by not divesting of assets to continue to operate. We can fantasize about BK but if it happens it's because nat gas is $3 all the way to 2018 and beyond
" Hedging is always a difficult decision." no - if you can lock in at 20% operating IRR you do it. or at least some of it. you don't crow about how you were smart not to hedge as they did on the CC...the market gods frown on such
always nice to decipher and steady as she goes rbb - no need to get all boned up on oil window. they have 200mn to go shopping , nice boost 2015 prod., good hedges in place. lets cover the div next year and we should trade trade 35-40. enjoy the clippings
simple extrapolation says that their UEO is worth 600mn so in total 762 which is 10x expected ebitda for the projects. and consistent with what mismanagement has stated.
some decent posts again! yes, 162 for 9% in pure gathering vs ? for 21% in gather, fraction, processing....i'd say a decent trade selling at 10x ebitda...and not a bad time to have $200mn and go shopping....