Replies to post #6156 on Cross Border Resources, Inc. (XBOR)

[SeaOhToo]

LMAO, no need to worry about $9.5 million dollars in debt. The bank will just keep refinancing it! LMAO. Anybody remember Pure was in BK before? When doing DD read the financial reports. Gotta love Little Bay and Greenshoe financings....Now maxed out at $9.5 million. Other oil and gas companies have NO DEBT!

[Ed Ajootian]

Romans & Boomer, I agree that the present debt level is very manageable and there is room to take on some more debt. I like to look at EBITDA/ Interest Expense, and that was about 10:1 for 1Q, which is considered "investment grade" I believe.

When I first saw, when the 1Q 10Q got filed, that they maxed out their line in April, I got a bit spooked but then I remembered the seasonality of their drilling program (due to prairie chickens) and it turns out that their total cap ex for 2Q '11 was a mere $1.2M. Its likely that their cap ex for 2Q '12 was probably something similar to this figure. Considering they had $2.9M of accounts receivable at 3/31/12, just about all of which got collected in 2Q, it seems likely that they simply had no need to increase their debt capacity for 2Q.

3Q is another story though -- I'm expecting the drilling program to ramp up this quarter, probably to a level that exceeds their cash flow. Maybe they'll announce a new debt facility in conjunction with their annual meeting on 7/31.