I am certainly not saying that they are in good shape. Far from that. I am just saying that they are in the same or at least similar shape as many other E&P companies right now. And, IMHO, it will get worse before it gets better. The big question for MHR right now is, will they be able to get at least $500 and preferably $600m for their pipeline division? If they can do that, they will be in reasonable shape for the next couple of years. Evans is a pretty creative finance guy. This obviously is not a good environment to be selling O&G assets into, there are a lot of potential sellers and the buyers all want bargains. But Evans might be able to structure something that will get both sides what they want/need, at least more or less.
Take a look at companies like PVA. Or GST. Or TPLM. or CHK, for a bigger example. SWN. They aren't alone, you could pretty much throw a dart at the explorers and hit a company that is in distress. They all have a lot of debt, tumbling revenues and potential assets to sell. Some are in better shape than others.
Even the Saudis are having liquidity problems:
money.cnn.com
excerpt:
Saudi Arabia is under tremendous pressure. The Saudi government is considering slashing spending by a staggering 10% as it seeks to stop the budget deficit from growing any bigger. The IMF predicts that Saudi Arabia could run a budget deficit that amounts to about 20% of GDP.
The pain is manifesting itself in different ways. Not only will the Kingdom have to cut spending, but it has also turned to the bond markets in a big way. Low oil prices have forced Saudi Arabia to issue bonds with maturities over 12 months for the first time in eight years, raising 35 billion riyals (around $10 billion) so far in 2015.
Who will blink first? The Saudis or the creditors of the shale companies?
The conclusion of the above article isn't sanguine about the near term price for oil:
There is little chance that Riyadh would retreat now just as the worst pain is really beginning to set in for rival producers. Sure, Saudi Arabia is suffering from low prices, but its competitors are hurting worse. U.S. oil production, after years of blistering growth, has not only ground to a halt, but has started to decline. Output peaked in March at 9.69 million barrels per day (mb/d), dropping to 9.51 mb/d in May (the latest month for which accurate data is available). In all likelihood, the decline has picked up pace in the intervening months. And more to the point, U.S. oil production will continue to decline the longer Saudi Arabia holds out. Several companies have already gone bankrupt, and more are no doubt coming down the pike. That will allow Saudi Arabia to achieve its goal of holding onto market share, and letting prices adjust on the back of rival producers.
To highlight this point, Saudi Arabia's decision to cut its budget should be seen not as evidence that it is buckling under crushing weight of low prices, but that it is in the game for the long haul. It is shrinking its budget to fit a world of depressed oil prices, positioning itself to ride the wave as far as it goes. Cutting spending is actually a signal of the government's resolve in regards to its current oil strategy, not a sign of wavering.
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