Jakson, great post.
At this point the company has to reduce debt and maximize revenue stream. Their major revenue will come from VM 170 which they haven't started drilling yet. For I-1, they will have to wait for another couple of months to get any revenue. They will need working capital to fund I-1 to some extent and for VM 170.
The best case scenario in my opinion is for them to figure how much working capital they would need to continue operation normally. i.e costs for 3-6 months. This will include if any capital needed for I-1 as well as drilling costs for VM 170 until it gets to production and get Bank loan.
Based on their past history they have relied on third party lenders who always have equity interests which means issuing more shares or paying higher interest rates. There are exceptions, but generally speaking.
Bank loan is interesting because you will get loan and you have to pay interests about every 3-6 months. The interest rates are typically very low 5 to 10% and that is what this company needs time to repay. That will allow them to stay afloat and jump start projects that are pending. Once it is in full production mode, they will generate revenues and able to pay down interest, no dilution and no revenue interest split on wells.
I have personally seen companies do equity financing through venture capitalists and also succeed. The flip side they issue more shares and drive down PPS to ground and when company starts producing revenues they buy back shares as PPS is low.
AI
