Yes, 50% reduction in debt and keeping 50% cash is reasonable as well. They could always make a purchase using shares too. You are right in that it will most likely be a few more quarters before we see the benefits of the further cost cutting taking place along with the benefits of the stronger USD in some regards.
My GUESS is that they buy some smaller currently profitable mine/s and spend about 100 million and offer a board seat and high salary to lure them in. That would offset any lower Westwood production and eventually Sadiola shutdown. Just a guess as I would rather them pay down the debt if not off the entire thing.
I was scrolling through the option table and noticed that large interest in the December 2015 $1 puts. I don't know when they were transacted and weather or not they were sold to open (bullish) or bought to open (bearish). Does anyone know when they were written i.e. during the $1.15 trip?
It had been about 3 months since any transactions occurred so lets hope it continues and there are more buyers.
For IAG to cross $2 we need gold to get and stay above $1,150-$1,160 area IMO
kellb72601, where did you hear bondholders offered a deal at $.50 on the dollar? If EXXI rejects that they are making a terrible mistake IMO. Considering the 'negotiations' started with the bonds in the $.60 on the dollar range and EXXI offering a $.10 premium then I doubt the bondholders would agree to even less than they could of gotten unless they get a higher interest rate and some equity and second lien status, etc... EXXI would be far better off going to the open market and buying some bonds anyway I think its worth the risk of cash to deliver with a 300% to 400% return on their money.
Correct and there is only 150 million available of the 500 million because 350 already has a lien on it. EXXI needs to be able to reduce their bond interest by 50% which would take $9-$10 cost per barrel out and break even would be $43. They can also reduce other expenses to shave a few more dollars off I am sure.
What gets me is after oil's initial slide to the low to mid 40's and rally to the 60's the oil futures market was showing high 50's to low 60's years out and why they did not hedge at least half their production using swaps is beyond me?
I knew it was a bad sign when gold was up @$8 or so and IAG was down or flat and GDX under-performed too. Miners in general just can't catch a break! Despite what some say I believe a worldwide production cut will impact the price due to the Jewelry market and ever growing world population. Not to mention the Central banks around the world are most likely buying as they devalue. Apparently most of us were WAY too early for the next major move in gold.
Great idea bondguy. I like the not paying interest for up to two years to give them breathing room as well. Chapter 11 would be bad for everyone including current BOD and management as they would all lose equity and be fired in reorganization by angry bondholders!
It doesn't make much sense other than forced margin calls for other losing positions. Notice the selling in GDX and IAG accelerated later in the day after 2pm with gold not moving too much lower. Right now at $1,150 IAG breaks even so the stock should be trading much higher. The stock is still priced based on gold at $1,100!
EXXI is 2 years away from BK if oil remains at $40 and most will go BK if oil loses $20 more and stays there! The article doesn't talk about the fact EXXI has 750 million in cash! EXXI does need to negotiate their bonds and ask bond holders to take a 20%-50% hair cut or interest rate cut or a combination and offer bond holders equity to make up for the 'haircut'. It will dilute shareholders but will also remove a lot of interest expense and remove a good amount of debt off the books and will make EXXI weather any storm.
Right now EXXI and the current bondholders are being stubborn or dumb as it has been 90 days and they can't reach any agreement! What are they paying that consultant so much for anyways!
lol Yes, that is true! All I know is that if I did the opposite of what I have done in the market I would be on a Yacht in the Cayman Islands passing by EXXI offices!
I feel a little better in that I am only the second dumbest out there! ; )
The middle east is far too stable so any disruption there will stop the carnage here.
Agree on both points that a fed not hiking will stabalize oil above $40 and also the next test is $33 2009 lows. That drop if it stays there will be dire for most levered oil companies unless it recovers fairly quickly like in 2009. War is the answer to any quick remedy near term IMO
Yes I heard $19 or so is their break even but....they need $100 oil to keep their budget balanced thus are going into their reserves and eventually will be in trouble albeit not as soon as oil companies will be and are. The oil bond market is getting obliterated and that bond market is 20%+ of the entire corporate market the highest ratio ever. That alone has huge ramifications for the US economy despite what the FED or government say that low oil is good. Their own pension money is most likely in those bonds or hedge funds or mutual funds in those bonds! I have already lost 50% of EXXI bonds trying to catch a falling knife the past few months!
I don't know what is taking them so long to get a deal done bondguy? I am almost halved in less than 2 months on my 9.25% bonds. All bond holders should agree to a 30% haircut to reduce leverage, interest payments and help the company weather the storm. In exchange they should be given warrents. At least Russia and the Saudi's are hurting too which is the only good thing. If only the US would allow oil to be exported that would help WTI pricing and hurt Brent so I don't know what our 'leaders' are waiting on?
thanks for posting that maven. That would be another good sign that management is extreamly serious about containing costs and getting AISC lower and conserving cash. With WTI oil getting close to going below $40 it means a world wide recession is already taking place and one in the US is close if we are not already in one IMO.
IR just replied to me on my question. They seem very secure in their liquidity and the fact that they do not have to use a revolver muchness worry about a revolver being reevaluated this fall as many other E&P companies will have their redeterminations. They also emphasized that EXXI gets a premium to WTI unlike a lot of the troubled shale plays that get a discount to WTI.
I like their optimism and the fact that they acknowledged they are working on cutting costs and the fact that $19 per barrel is interest expense. IF they can renegotiate their near term bonds to reduce the rate to 5% in exchange for a second lien that would be ideal IMO. They could reduce other longer dated bonds to 5% in exchange for convertible preferrers. With the average bond trading at $.25 on the dollar it would benefit them, equity and the company outlook. Even $5 a barrel in interest expense will make the B/E $47 from current $52 not including other measures that will likely move costs down a few more dollars in the next year IMO.
Very little as they didn't write swaps from the graph in their presentation from what I saw so only options with floors which I believe from memory we are below the floor. They are penny wise and pound foolish as they should of hedged most of their oil for a year or two when futures bounced to $60 per barrel just over a month ago! Their best unsecured bonds are trading at $.28 on the dollar which is VERY bearish. I haven't gotten responses from IR the last couple emails to them and they usually reply promptly so hope its because they are overloaded with inquiries and not afraid to answer my questions.