Absolutely not. And the $110 million they are required to commit will pay for the HCSS as well as enhanced production from SAGD. Key fact here is that in Canada, you qualify for bank financing if you can show six months of sustained production averaging 1000 barrels per day.
So going forward, all revenue can be leveraged for bank financing, which will cover a minimum of 50 per cent Capex. More aggressive Canadian banks will fund in excess of 80 per cent Capex after 3000 barrels per day flow is established for six months. For secured (with oil production) loans, going rate is LIBOR plus, with the plus varying on the long-term reservoir production modelling.
Current LIBOR (12 month Canadian dollar loan) is 1.7685 per cent, so basically DWOG should be able to borrow for Capex at roughly three per cent interest to pay for expansion beyond the two demonstration projects.
