Friday, February 13, 2015

Goodrich Petroleum President & COO Robert Turnham at EnerCom Oil & Gas Conference 2014


Anonymous said...

You can tell the company has excellent operators but no strategic focus.

GDP "strengths are acquiring acreges and then... figuring out the best way to access capital."

In other words, spending massive CAPEX with zero concern for ROE, as management has been doing while accumulating loses year after year.

According to the prior GDP annual reports, one of the most severe risks to the company is a reduction in the price of oil.

Lower oil prices will likely trigger one or more of the three covenants on the Senior Credit Facility, pertaining to the following three financial ratios:
1) the Current Ratio,
2) EBITDAX to Cash Interest Expense, and
3) Total Debt to EBITDAX.

It also seems rather obvious that the company will not have sufficient liquidity to continue operations throughout 2015, as the borrowing base on the Senior Credit Facility will get redetermined -- and further reduced -- on the first of April.

CP said...

Their balance sheet shows retained earnings of negative $860 million.

They've been in business 20 years. At the high end, if they had produced their current rate of oil production (~1mm bbl/y), they've produced 20 million barrels.

That's a loss of $43 per barrel - a subsidy by their investors to consumers.

And that estimate of cumulative production is probably very high.

CP said...

"figuring out the best way to access [new] capital"


"figuring out the best way to compound existing shareholders' capital"

CP said...

I think they should:
* cash in their hedges
* pay off the senior loan
* do an exchange offer to reduce the 2019 debt

Anonymous said...

Mgmt likely views the hedges as 2-3 quarters of runway. The key signal to watch is when GDP suspends dividends on any of the preferred shares. That will indicate if mgmt thinks a JV partner can be found to develop TMS, or if they realize the company is reaching a dead end.

Are you long the 2019 notes and short the common, CP?