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Raymond, since you have been following HEC for a good chunk of at least two years, maybe you have at your finger tip some important information, like their cost of finding oil, their expected cost of extracting the oil and their expected cost of transportation (one set of wells is pretty close to an existing line, but I do not know what is that field's capacity). Another chunk of information is how much of a find does HEC retain and how much they have to pay to partners and to Columbia.
In any event, in some of HEC writings they were talking about some monstruous sums (like close to a billion) required to exploit their potential fields, right now they have on hand only some 10% of that and if they end up like Arakis, unable to find bank financing for the additional funds required, the picture might end up being very similar. The Fed's have reduced rates because third tier companies were shut out of the "normal" credit markets, and until these financing markets open, HEC might have to resort to convertibles and floorless convertible, further eroding the equity base.
By the way, one of the reason that HEC has some money on hand is exactly the $100 MM plus of floorless issued earlier this year.
Zeev |
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