MHR just increased their bank line substantially so we know they are in compliance with everything there. Probably why they hedged half the production going forward.
Financing from the preferred shares has no covenants, of course. And their remaining cash flow is all coming from production right now.
The bear scenario for this stock is that oil drops so far that they can't keep up with debt service and drilling from cash flow and have to cut back and/or start selling assets into a weak energy markets.
And a good deal of that scenario is already priced in with MHR under $2.50.
The $300m market cap isn't much more than what the pipeline is projected to be worth next year.
Here in Ohio we are seeing lots of protest activity on fracking. I would guess the same happens in near any of the shale plays. Just Google "Ohio +fracking" for a list of articles from both sides of the argument. It is basically science vs. hyperbole....
Tounge in cheek, and agree. Continue to view public markets like casinos, computer driven rigged games - that can create great opportunities for the intrepid poker (or better, blitz chess) player. <10% public securities, the rest private (great opportunity to be the bank, creating investments with senior debt, high teens coupons, equity kickers and strong downside protections / collateral). NORW, MHR, AXL, STO, VLY, MERKX, BRKB among public holdings, with >50% of the ~10% Norway-related. Cost basis for all other than MHR at/below/around current levels. Did add to NORW and MHR today near lows.