Macro Tsimmis

intelligently hedged investment

Transmeridian (TMY) update #6

Posted by intelledgement on Mon, 16 Jul 07

More bad news for Transmeridian Exploration (TMY) announced after the close today: two weeks of production curtailment have become at least four weeks, but apparently management have worked out a deal with Kazakhstani authorities to resume operations without any penalty for gas flaring until 1 November. They expect final approvals on the deal by 27 July at which point production could resume. If the plan to deliver the NG to a local manufacturing concern is not in place by 1 Nov, then the company would be subject to fines for any flaring.

Losing a month of production this quarter is already very bad from a cash flow perspective. Obviously operations have been cut back, which reduce variable costs, but fixed costs and debt service cannot be avoided. Presumably we will have to see what the cash situation is like in October; more dilution may be necessary to raise cash to keep the doors open.

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