Excellent message from Slipperywing on the Yahoo board.
I am no banker, but if this is true, management must start to use all forms of financing, especially considering Padgetts #11 & #12, not just dilution/issuing shares. It great to go the easy way, but with solid dependable wells, some loans may be appropriate.
Re: The day was salvaged, but....(Sabre, opinons?)
Boy, you guys have a thing or two to learn about financing in the oil
and gas industry.
Banks lend based on net cash flow, not "lease values or drilling rigs".
Right now, banks are lending at about 40 to 50 months net cash flow.
So if you're net cash flow is $100,000 per month, they'll lend you $4
million for drilling additional wells.
Effectively, Bitters could go to just about any bank in Oklahoma, or
Texas for that matter (although I am not as familiar with banks in
Texas), show them his current production and balance sheet, and could
walk out with a line of credit around $5 million, easy.
Some are claiming that interest rates are making bank debt less and
less attractive.
Why do you care about interest rates when you're looking at an 8 month
payout! Give me a break!
I'd take a $5 million note at 10% when I know I can pay out in less
than a year AND have an increase in cash flow of $100,000+ per month
after the bank has their money...
AI
