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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: cyesp who wrote (114636)12/6/2008 9:22:39 AM
From: Ed Ajootian1 Recommendation  Read Replies (1) of 206338
 
cyesp, thanks, that's most helpful.

All these reserve writedowns will almost certainly result in many blown debt covenants. In a normal credit environment, when a borrower blows a debt covenant, but is still making all of their payments, the bank just exacts a pound of flesh from the borrower and life goes on. But as we know this is not a normal credit environment.

Technically the banks could force a lot of these companies into BK but I wonder how many will do that, especially if the payments are being kept up. The likelihood of a bank getting its money back in a forced liquidation of oil & gas properties in this market is slim to none.

Wouldn't it be ironic if an oil & gas company becomes one of the next ones to be looking for a bailout!
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