The price for reserve valuation will be $83 for March 31, 2015. It was $95 for the year ending 2014.
The price used comes from a 12 month rolling average, so it will take a few more months of low oil pricing before the full effect of this price collapse is in place. IMO, it will be close whether writedown occurs in Q1, however, Q2 could be more problematic.
Also, EOX convertible notes have no financial covenants, thus that part of the debt will not be impacted until 2019.
The $300 market cap doesn't suggest bankruptcy. In fairness to the impairment issue, much of the AREX reserve assets are comprised of gas, which has experienced a lower price decline than oil.
Still the danger is how long oil and gas prices stay depressed. If it goes on for two or three years AREX equity is at risk.
PV-10 was $1.413 billion. Net book value of proved property is $1.221 billion. That's only a 16% cushion.
With the decline in oil prices, AREX will be vulnerable to a property writedown in Q1 2015. The danger of writedowns will become more severe in Q2 and Q3 unless oil prices rebound soon.
I'm waiting for the 10-K report to get an idea how much risk there is of property impairment.
While I'll be the first to agree about the importance of accounting, there is so much uncertainty with this company's future that any valuation is speculative.
ESTE changed its fiscal year to Dec. 31, so the earnings announcement is not yet due.
Also the LEI thing is fascinating showing how solving a cash problem can bring the dead back to life. There probably will be others like this in the E & P arena.
Earnings are immaterial. In fact you can throw out all of 2015 eps too.
Instead focus on the balance sheet and the quality of the properties. The PV-10 details will give you an idea regarding property impairments in 2015. It's a question of survival of the stock without more dilution.
Just found it on page seven of the 12-30-14 news slides. The fiscal year end is being changed from March 31 to December 31.
SEC allows 45 days to file a 10Q, but 90 days for small cap companies to file a year end 10K. Thus Earthstone has until about March 31 to report. Dial your calendar forward.
No 10Q. Either Earthstone is late, or maybe I missed something.
Is there any chance ESTE changed their fiscal year to end on Dec. 31 as opposed to March 31? I can't find such an announcement, but they would have an extra month and a half to file a 10K report.
Yes there has been dilution. There were about 14 million shares of convertible notes turned into equity, and now the $25 million stock offering brings in another 23 million shares,
However, even with the dilution, the shares trade at about 30% of value of their assets, with the better debt to equity structure this is a big positive.
Usually stock offerings depress a share price for a week or two. We haven't given it EOX enough time to rebound.
It looks like the Yahoo Police have caught us, giving both of us two thumbs down.
However, if anyone has connections to Yahoo management, send my message to them. This is a real problem and this is coming from someone who understands these strategic issues
It's links often don't work. The message boards are full of spam.
If the company doesn't get its act together, the quality people will all be gone to SA or IV.
Come on Yahoo, fix it before it's too late.
Sounds like the deal hasn't yet been fully negotiated. Victory Energy seems to be in as much trouble as Lucas. So how much stock to the two combined have to give up in order to receive the $20 million of cash?