SierraBravo
02 Mar 2015
Re: price on news(will rise Spike,I ponder whether the $40 netback can be me. Higher netbacks were around, from memory, the $55 mark. But Poo was rather better. So a $40 netback icould be generous or current oil price.But..... There is some hedging, so existing production does probably make a higher figure - whilst the hedges are in place. But I am unsure as to the amount hedged. It seems to me that pressure is on the netback for newer production. Which may mean that burn rates increase, since revenue will be dropping off as the hedges unwind.
spike501
02 Mar 2015
Re: price on news(will rise DelboyIn 2013 Caza went through working capital of around $30million.In the first half of 2014 Caza went through workiing capital of $20millionIn Q3-14 Caza went through working capital of almost $4millionAt the end of Q3-14 total working capital was down to $2million. $4million will be drawn from YA, but is likely that working capital burn was in excess of $4million in Q4 - Caza will be approaching zero working capital.Generously assuming Caza is producing 1300bopd at netbacks of $40 per barrel, this will leave around $2milion per quarter after expenses. This is enough for a 33% in on Bone Springs well per quarter which is nowhere near enough to keep up with decline rates.
DelBoyTrading
02 Mar 2015
Re: price on news(will rise Yes I live on cloud cuckoo land, classic comeback. Bravo
spike501
02 Mar 2015
Re: price on news(will rise "Lets not forget that they could still carry on drilling and make a profit"Have you ever read the accounts? Have you not seen how much money Caza burn through every quarter to keep up drilling activity.Regardless of your view on whether Caza has a future or not, the above statement just shows you live in cloud cuckoo land.
DelBoyTrading
02 Mar 2015
Re: price on news(will rise Caza will be fine and I believe they are making some shrewd decisions to ensure this. Lets not forget that they could still carry on drilling and make a profit but are batten down the hatches just like most oil companies, public, private and now national. The CAPEX cutbacks from the oil companies have been more aggressive than anyone actually thought and even though this is perhaps going unnoticed right now it wont be long before it starts filtering through. The funny thing about it all is that even the Saudi's are beginning to ditch projects that are not economical at these pricesWith the worlds increasing requirement for oil, coupled with the current cutbacks there is a perfect storm brewing and we will soon find ourselves in an undersupply scenario and a $120-$150 oil price trading range. The Saudi's know this
indolent
02 Mar 2015
Re: price on news(will rise "So is caza finished? Discuss"I don't know for sure which measure of the oil price influences this most but Brent is up what a third from it's low but WTI is only up 13%. If memory serves Caza don't get as much as WTI but currently there is hedging. If management can find a medium term source of finance to keep the company going for another 6 to 12 months without relying on SEDA then they might ride out the oil price slump. I have a feeling it is structural though and $70 to $80 for WTI will be about as good as it gets for more than a year. My guess is that Caza will be one of a select group of oil price permanent casualties on the calling in of guarantees. Arran wasn't really unlucky as there was a low(ish) CoS and the price had simply been bandwagoned previously. This time though I think management and investors and Apollo are just plain unlucky as everyone knew the ultra high gearing was perilous. Life called their bluff.
SierraBravo
02 Mar 2015
Re: price drop on news "According to someone posting on LSE message board who had contacted CWEI there are no penalties due so we are in no worse stiuation than we were before."That may well be the case. But it seems likely to me that there was going to be **some** exit cost. After all the agreement was for CAZA to provide funding towards the drill for a greater portion of costs than their revenue share.The affect of this would be that CWEI hurdle rate was significantly lower for the success case.In effect the deal gave CWEI sound value and money for allowing the agreement. Why would they simply say "yeah, ok we'll unwind it" without some form of compensation.Of course it is possible that CWEI were up against it financially, and they couldn't keep to their side of the agreement.I am very sceptical that CWEI would give out that sort of very sensitive commercial information to an outsider.
SierraBravo
02 Mar 2015
Re: price on news(will rise spike,Caza had always been not quite there. Despite a god run of results they were always running to stand still. Never really quite got to overall profitiabilty, though always close and "soon".The drop in the price of oil gives them many large challenges. Whether things are as bleak as your last paragraph is uncertain. But the overhanging debt is going to be very problematic for a long time to come.
plicostomus
28 Feb 2015
Re: price on news(will rise So is caza finished? Discuss.
spike501
27 Feb 2015
Re: price on news(will rise The price fell quite rightly because it was another indication of how cash strapped caza that they had to relinquish some potentially important acreage.I would advise holders of Caza now to seriously consider to protecting their capital.The Caza story was based upon using significant debt to conduct a rapid drilling campaign to a position of being more or less self funding and then a sale of the acreage at a significant premium. I calculated self-funding to require around $75million at $100 - its way above this now.Both the access to plentiful debt and the aggresive acquistion market for acreage in the Permian have disappeared and even a return to $80+ oil by the end of this year which looks increasingly unlikely will still not see the debt and acquisition markets return for some time while the risk washes through the system and the acquirers mop up the large number of distressed assets.It is highly unlikely that Caza has access to enough debt to grow production further - it will not be able to keep up with the decline rate and it will become an increasingly vicious circle that cashflow declines and so new drilling declines and so production declines etc etc. Admin and debt interest costs are around $11million per year - even with hedging netbacks are down to around $30 per barrel so Caza will need around 1000bopd to cover overheads and in Q3 it was only 1200 barrels - while it may have increased in Q4, there is no less drilling going on so I struggle to see Caza maintaining above 1000bopd into the second half of this year. The best scenario I see here is a continuing issuance of equity under the Yorkville or a placing which won't do existing shareholders much good, while at worst case convenants may well be breached on the Apollo loan in September and towards the end of this year and into next year making the required Apollo payments is a risk.Caza will still fluctuate with the price of oil but sadly I see no long term future here, even if oil prices were to recover somewhat. Its a shame - the BOD made the right moves but when the product you sell falls in price by 50% there is very litle that can be done.
malkis
27 Feb 2015
Re: price on news(will rise ooks like market has misunderstood that and believed (the way I read the RNS too) that there was a cost to terminating. That should have been clearer in the statement and Caza would be wise to make it explicit that theres no cost££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££££ I've changed the heading as i.'m sure you are correct jaxons ax and i've added more today WARM REGARDS MALKIS
jaxonsax
26 Feb 2015
Re: price drop on news According to someone posting on LSE message board who had contacted CWEI there are no penalties due so we are in no worse stiuation than we were before.Looks like market has misunderstood that and believed (the way I read the RNS too) that there was a cost to terminating. That should have been clearer in the statement and Caza would be wise to make it explicit that theres no cost
SierraBravo
26 Feb 2015
Re: price drop on news No mention of the exit costs. It was 1.6 for each of the two wells beyond the initial commitment well, but since it didn't get as far as the commitment well I hope this is not payable.Or maybe we now know exactly what the recent loan was for.
Ripley94
26 Feb 2015
price drop on news no comments for a week !
That_Will_Smart
24 Feb 2015
Re: Yorkville W. Michael Ford, Chief Executive Officer commented:"We're pleased to announce this financing, which continues our good relationship with these Investors. The financing benefits Caza by providing additional capital and optionality at this time..."I can't remember a share where I've ever had a good experience when YA were involved. Usually 'death spiral' finance. I will judge CAZA on how much of this facility they draw - hopefully non/minimal. Michael/BoD if anyone reads this I implore you to cut costs radically now rather than wait for POO to improve. The market can easily stay 'irrational' longer than we can afford to wait it out. Cut costs now (and not just drilling commitments).I was trying to think what rating to give this share but can argue anything from Strong Sell to Strong Buy so will stick with 'No View'. Currently not selling any but not adding either at this point.GLA Will
