Macro Tsimmis

intelligently hedged investment

Transmeridian (TMY) update #18

Posted by intelledgement on Wed, 16 Apr 08

The saga continues…Transmeridian announced today that they are seeking new financing. This is hardly a surprize in view of their spurning of a $2/share external buyout offer last year in favor of a $3/share offer from management that failed to come together, all in the face of declining production and continued operational losses.

Management now say they believe “that the company can continue to generate sufficient cash flow to fund its ongoing operating costs, overhead and cash interest requirements” at the current production level of 2200 BBLS/day, but that they are seeking additional cash to enable them to boost production to 4000 BBLS/day. This is a different story than we heard last year, when they said they needed 4000 BBLS/day to keep the doors open…and is also a more optimistic assessment than that of their own accountants, who saddled the company with a going concern note in their 2007 10-K, as reported here last month. Of course, the price of oil is a lot higher now than it was last year, so manifestly 2200 BBLS gets you further than it used to cash flow wise.

Stay tuned. We are in the for duration; at least we are getting entertainment and educational value for our money.

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