Resaca Share Discussion Threads

[half man half codpiece] 01/7/2009 18:52

New Credit Facility

RNS Number : 7092U
Resaca Exploitation Inc
30 June 2009

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+-----------------------------------------+---------------------------------------+
| for IMMEDIATE release | 30 june 2009 |
+-----------------------------------------+---------------------------------------+

Resaca Exploitation, Inc.

("Resaca" or "the Company")

New Revolving Credit Facility
Resaca (AIM:RSOX), the oil and natural gas production, exploitation, and
development company focused on the Permian Basin in the USA, is pleased to
announce it has entered into a three-year $50 million Senior Secured Revolving
Credit Facility with CIT Capital USA Inc. ("CIT") and NGP Capital Resources
Company ("NGP"). The new revolving credit facility replaces Resaca's existing
credit facility with NGP, which converted to a term loan on 1 May 2009. The
initial borrowing base of the new facility is $35 million and CIT will serve as Administrative Agent. Resaca will pay 5.5% over LIBOR subject to a 2.5% LIBOR floor, for an interest rate of 8%. This reflects a 2% reduction in the Company's interest rate as compared to the prior loan from NGP. In conjunction with closing the new facility, the Company entered into additional natural gas hedges for January 2011 through June 2012 and additional oil hedges for June 2011 through June 2012.
Jay Lendrum, Chief Executive Officer of Resaca, commented:
"We are extremely pleased to close our new revolving facility in these
challenging times. The new facility will provide liquidity and lower our
borrowing rate. Also, we are excited to establish a new long-term relationship
with CIT while continuing our relationship with NGP, which has been with us
since our formation."
For further information please contact:

+-----------------------------------------------+--------------------------------+
| Resaca Exploitation, Inc. | |
+-----------------------------------------------+--------------------------------+
| J.P. Bryan, Chairman | [phone] |
+-----------------------------------------------+--------------------------------+
| John J. ("Jay") Lendrum, III, Chief Executive | [phone] |
| Officer | |
+-----------------------------------------------+--------------------------------+
| Dennis Hammond, President | [phone] |
+-----------------------------------------------+--------------------------------+
| Chris Work, Chief Financial Officer | [phone] |
+-----------------------------------------------+--------------------------------+
| | |
+-----------------------------------------------+--------------------------------+
| Buchanan Communications (Investor Relations) | [phone] |
+-----------------------------------------------+--------------------------------+
| Tim Thompson | |
| Catherine Breen | |
| Katharine Sutton | |
+-----------------------------------------------+--------------------------------+
| | |
+-----------------------------------------------+--------------------------------+
| Seymour Pierce Limited (Nomad and Joint | [phone] |
| Broker) | |
+-----------------------------------------------+--------------------------------+
| Jonathan Wright | |
| Richard Redmayne | |
+-----------------------------------------------+--------------------------------+
| | |
+-----------------------------------------------+--------------------------------+
| RBC Capital Markets (Joint Broker) | [phone] |
+-----------------------------------------------+--------------------------------+
| Sarah Wharry | |
+-----------------------------------------------+--------------------------------+

About Resaca

Resaca is an independent oil and natural gas production, exploitation, and
development company based in Houston, Texas. Resaca is focused on the
acquisition and exploitation of long-life oil and gas properties, utilizing a
variety of primary, secondary and tertiary recovery techniques. Resaca's current
properties are located in the Permian Basin of West Texas and Southeast New
Mexico. Additional information is available at www.resacaexploitation.com.

[jailbird] 19/6/2009 09:30

from interims..not sure cash is rosy, they are running on debt facilities however. But it will be not a problem once they can get sell their reserves.


Liquidity and Capital Resources


Summary


Our cash flows from operations are significantly affected by the market prices
for oil and natural gas at the time of sale, our production output, and the
success of our exploitation activities. Our hedge positions reduce our exposure
to declines in oil and gas prices. We intend to draw on our $32 million of
available capacity on our senior loan facility at December 31, 2008 to fund our
capital development program and for selective acquisitions.


At December 31, 2008, we had $0.7 million of cash on hand and $28.0 million of
total debt outstanding. We are currently in discussions with numerous energy
lenders to refinance this outstanding debt, which we expect to extend the debt
maturity and lower the Company's borrowing rate.


The current worldwide financial crisis has reduced the availability of liquidity
and credit. Continued disruption of the credit markets could adversely affect
our ability to implement our exploitation plan and limit our ability to expand
our asset base, which could materially impact our results of operations,
financial position or cash flows. Notwithstanding the current market
conditions, Management believes it is well positioned in this market and intends
to leverage the many relationships with energy lenders and other capital
providers that it has developed over their extensive careers in the oil and gas
industry to endure these difficult times.






Capital Expenditures


We have made and will continue to make significant capital expenditures in the
development and production of our oil and gas reserves. Our capital expenditures
for the six months ended December 31, 2008 were $17.2 million, a $14.7 increase
over the same period in the previous year.


We expect to spend an additional $5 million on capital expenditures over the
remaining six months of our current fiscal year. Those expenditures will focus
primarily on the Cooper Jal and Jordan San Andres properties and will include
facility work, waterflood optimization, additional water source wells, and water
injection well cleanouts. There are currently no new wells scheduled to be
drilled or behind pipe workovers expected to be completed in the near term.


Substantially all of our future capital expenditures are discretionary based on
our ability to draw down on our existing credit lines as our cash flow from
operations is not currently adequate to meet our immediate investment needs.






Cash Flow Activity


Operating Activities. Cash flows used in operating activities increased $3.2 to
$3.6 million for the six months ended December 31, 2008 from $0.4 million for
the six months ended December 31, 2007. Net income adjusted for non cash
transactions increased $2.5 million from ($1.8) million in the prior year to
$0.7 million in the current period. This addition was offset by a $5.7 million
decrease in net working capital.


Investing Activities. Cash flows used in investing activities increased by
$15.0 million to $17.5 million for the six months ended December 31, 2008 from
$2.5 million in the prior year. The increase was primarily due to $17.1 million
in investment in our oil and gas properties.


Financing Activities. Cash flows provided by financing activities increased
$19.2 million to $21.6 million for the six months ended December 31, 2008. Cash
flows provided by financing activities were $2.4 million during the six months
ending December 31, 2007. The increase was primarily due to $74.9 million being
provided by our initial public offering offset by $44.3 million and $15.0
million used to paydown Tranche A and Tranche B, respectively, of our credit
facility.

[half man half codpiece] 19/6/2009 09:00

nice find ghhghh
Looking very good for this stock with NAV 120p

[ghhghh] 19/6/2009 07:09

Resaca is probably not a stock for those seeking the thrill of high impact exploration. But as Lendrum points out the Resaca does not have to find the cash for exploration and development either. He believes that by incrementally increasing output and perhaps making acquisitions, Resaca could become a something substantial. He makes a case that on the basis of proven reserves but not proven, developed and producing reserves, the shares are worth around 120p, a long way north of the current share price. The Broker Seymour Pierce concurs with this saying the company is undervalued on the basis of a modest enterprise value for the proven reserves.

[dosser2] 18/6/2009 20:06

Price down, Half Man Half Codpiece. Should we believe the hype?

[half man half codpiece] 18/6/2009 08:38

These techniques could increase the recovery factor from 14 per cent to nearer 25 to 30 per cent over time; or by around 1000 barrels of oil equivalent per day a year to bring about production of 6,700 boepd by 2014.

[half man half codpiece] 18/6/2009 08:37

The group claims this first phase has been successful in that the company is now producing 720 boepd.

[half man half codpiece] 18/6/2009 08:37

Everything looking good here.

[half man half codpiece] 18/6/2009 08:36

This could be breakout day. Gap up on the cards here.

Seymour Pierce reiterate NAV 120p - buy today at 27p!

[half man half codpiece] 17/6/2009 10:39

This stock looks poised for an upwards surge. Hold on tight!

[half man half codpiece] 17/6/2009 10:39

Its very unfair RSOX has not joined in the sector rally with oil at $70

[half man half codpiece] 17/6/2009 10:38

Oil still over $70

[half man half codpiece] 17/6/2009 10:37

34,000 buy at 27p

Gap up on the cards. Seymour Pierce have re-iterated 120p NAV

[half man half codpiece] 16/6/2009 13:33

oil back at $72. I expect the price to gap up shortly.

[half man half codpiece] 15/6/2009 13:47

Someone just did! 18,200 bought at 27p.

[half man half codpiece] 15/6/2009 13:09

What does Seymour Pierce make of all this. It says: " Whilst the well flagged deferral of the next phase of the work programme has resulted in us downgrading our near term earnings forecasts, given the long term characteristics of the reserve base and lower cost estimates, it has not changed our asset value estimate which remains at 120 pence per share.

You can buy now at 27p!!

[half man half codpiece] 15/6/2009 09:59

Resaca's fields are mature and shallow – the average depth being less than 4,000 feet. They can produce from multiple formations and have long production histories albeit established decline curves.

[half man half codpiece] 15/6/2009 09:58

What does Seymour Pierce make of all this. It says: " Whilst the well flagged deferral of the next phase of the work programme has resulted in us downgrading our near term earnings forecasts, given the long term characteristics of the reserve base and lower cost estimates, it has not changed our asset value estimate which remains at 120 pence per share. In any event, at this very early stage in the development programme, Resaca is not an earning play; it is a reserves and asset value story. Seymour Pierce arrived at this valuation assuming an oil price of US$ 55 a barrel this year and US$65 thereafter. These do not seem unreasonable assumptions just now. The share price is currently a long way south of this asset valuation.

[half man half codpiece] 15/6/2009 07:55

April 14, 2009

Broker Seymour Pierce Is Upbeat About Resaca Exploitation's Reserves and Value Despite The Company's Deferral of the Next Phase In Its Work Programme





As its name suggests Houston-based Resaca Exploitation, which listed on London's AIM in July 2008 is at pains to explain its emphasis is on exploiting known hydrocarbon deposits in a low risk way rather than going for high cost exploration.
Following a well flagged deferral of the next phase of the work programme (in anticipation of materially lower costs and higher commodity prices) Resaca has produced some interim results and broker Seymour Pierce has come up with a re-evaluation of the group.

Resaca has interests in eight fields in the Permian Basin of West Texas and New Mexico. This is one of the largest and most prolific oil and gas producing basins in the US, having produced over 24 billion barrels of oil since its discovery in 1921. Resaca's fields are mature and shallow – the average depth being less than 4,000 feet. They can produce from multiple formations and have long production histories albeit established decline curves.

The eight fields have had 326 production wells and 90 injection wells as well as some shut in wells. Unlike many of its AIM peers, the majority (55 per cent or 17.3 million barrels of liquids) of Resaca's reserves are proven rather than theoretical. The latest reserves estimate state 2P reserves (proven and probable) are 28.4 million barrels of oil and 19.1 billion cubic feet of natural gas giving 31.6 million barrels in oil equivalent terms. Three P reserves (proven, probable and possible) are put at 33.9 million barrels of oil and 23.3 bcf of gas.

Resaca is slightly different to many companies in that it uses primary, secondary and tertiary techniques such as drilling infill wells, opening behind pipe zones, recompleting wells, reactivating and optimising waterfloods, improving field infrastructure and CO2 flooding, to unlock additional barrels from production and grow cash flows. These techniques could increase the recovery factor from 14 per cent to nearer 25 to 30 per cent over time; or by around 1000 barrels of oil equivalent per day a year to bring about production of 6,700 boepd by 2014.

This is not the kind of business that offers a white knuckle ride associated with high risk exploration, but suits those interested in low risk incremental increases in production and reserves and, if prices are right, cash flow. A dividend by 2010 has been talked about. Resaca started the first phase of capital investment in 2006. At the Cooper Jal Unit, Resaca's largest property, the company completed five new wells cleaned out three water injection wells and completed four behind pipe workovers.

The group claims this first phase has been successful in that the company is now producing 720 boepd. Moreover in the recent interim results, Resaca also said that water injection is in excess of 15,000 barrels a day. Chairman J P Bryan says this is not quite enough; the rate needs to be 18,000 barrels a day to boost production. However, the company says it expects to reach this rate in fields that have the best chance for immediate response.

In terms of cash flow hedging has helped soften the worst excess of the 2008 collapse in commodity prices with about 65 per cent of the company's 2009 production hedged, giving the group a floor prices of US$58 per barrel and a cap of US$66.30 a barrel with a gas floor of US$ 6.30 per million BTU and a cap of US$11.50 per million BTU.

However, in the face of lower oil and gas prices, although work continues on optimising the water flood facilities at Cooper Jal, Resaca has temporarily suspended new drilling activity across its properties and has also implemented a general cost –reduction programme. In addition, the company is in negotiations with lenders to refinance its current senior credit facility, of which it has US$ 32 million available to fund development work.

The way Chief Executive Jay Lendrum puts it is "Prudence dictates that we maintain existing production until we can receive a more acceptable price for these reserves". He adds that the company remains enthusiastic about its current asset base.

What does Seymour Pierce make of all this. It says: " Whilst the well flagged deferral of the next phase of the work programme has resulted in us downgrading our near term earnings forecasts, given the long term characteristics of the reserve base and lower cost estimates, it has not changed our asset value estimate which remains at 120 pence per share. In any event, at this very early stage in the development programme, Resaca is not an earning play; it is a reserves and asset value story. Seymour Pierce arrived at this valuation assuming an oil price of US$ 55 a barrel this year and US$65 thereafter. These do not seem unreasonable assumptions just now. The share price is currently a long way south of this asset valuation.

[half man half codpiece] 12/6/2009 10:08

RSOX has massive proven and probable reserves. A re-rating is well overdue.

[half man half codpiece] 12/6/2009 10:07

Gap up to 50 pence is well overdue.

[half man half codpiece] 12/6/2009 10:07

yes dosser this is off most people's radar. That will change soon.

[dosser2] 11/6/2009 14:29

Half Man Half Codpiece you seem a little bored on your own!!

[half man half codpiece] 11/6/2009 11:07

this should be going up on the oil price alone