Well, according to Mr. Market it sure is...
" Fri, Mar 25, 2016, 9:50 AM EDT - U.S. Markets closed for Good..."
Get Your Box Tops because Mr. Market will be sending out another noncompliance letter about the pps soon...
* Summary numbers: Revenues of USD 2.14 million, Net Earnings of USD -14.74 million.
* Gross margins widened from -315.15% to -191.09% compared to the same period last year, operating (EBITDA) margins now -167.55% from -322.77%.
* Earnings declined although operating margins improved from -352.32% to -233.79%.
Now let's put this into in a mind picture of why a Bank would fork over a new credit line of $30.5 million to protect the $15 million it already has allotted?
Imagine, it's 1881 and you're riding in a stagecoach called SSN on a winding dirt road in the Mountains. On one side is a huge cliff that falls 500 ft straight down to a valley below, and on the other side a steep mountain with rivulets of water running down the side from the intense rain storm that is going on. Ahead of the coach, the old wood bridge has been washed out, and behind, there are 8 bandits on horses which are closing in.
Does that make it easier to see.....
Get Your Box Tops !!
Ah, but I bet the Bank doesn't know there were no hedges on the new production that transfer over and the existing hedges can't be extended, which is one of those details they are considering....
It cost only $0.05 cents to charge 18v tools - 20v cost $0.06, so Vern is saving money, unlike Samson which is losing money daily with their new buy with no price hedges....lmao
which they have ZERO price hedging on because Oasis's hedging does not transfer, so what looks like 800 boepd, actually is 800 boepd at market costs for the output - which is producing a loss already.
Even at $FREE - I would not buy LL flooring now because the resale of my house would crater. I would end up ripping it up and replacing it, or signing a health statement warranty against future issues.
Ah, but Vern is right - the price hedges for Samson's existing oil does not carry over to the newly purchased oil and Oasis's oil hedges don't transfer with the deal either, so the prices for the new oil is the market price, which is so low the wells cannot be produced for profit....
Yep, no pricing hedges means the oil cannot be produced for profit, not only is there no profit for the new oil, they lose money with each barrel they pump at market prices.
Basically, Samson gets more oil reserves to replace their depletion wells, but they are producing that oil at market prices without any price hedges, so they are losing money on each barrel.
Exactly how does Samson make money when they lose $25 or more per barrel that they pump out of the ground? With no price hedges, they are in the same sinking boat they were before.
The oil hedges will not be transferred from Oasis to Samson and the only uplift is going to be in more manipulation of the stock, because there is no bottom in yet for oil, and no matter how much the oilers want to return to the good ol days, oil is done for at least 5 years because there are too many players in the market now, crude is stacked up at Cushing, and it waits in ships to unload in all the ports of the world with waiting time in the weeks not days - so the only players getting played now, are those owning oil stocks.
Watch it all vaporize as the details come forth - like the hedges for the new production will be at market prices because they don't transfer over from Oasis, and the out of the ground prices per barrel for the new production could be well over $55 per barrel, which leaves a $20 or more deficit on each barrel pumped - next think depletion of existing wells and then there is the per well costs of bitumen that gums up the works and requires a steam injection to get the oil flowing again, expensive ? - yes, and hard to get the service when other bigger oilers have deeper pockets and more clout do get the contracts - oh yeah - it's just getting started....