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I wrote: Hello Howard. I am a shareholder of MAD and I resdie in...

  1. 245 Posts.
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    I wrote:
    Hello Howard.

    I am a shareholder of MAD and I resdie in Australia.


    As you know, since the announcement of the Wells Fargo funding, much has happened in the market place.
    It is a very good time for Maverick of course right now to be a buyer in a buyer’s market.
    I do know that you and your colleagues have a lot of work to do to get a deal done. I absolutely understand that these things take time.

    My question is this.
    Given that Rig counts are down, the price of oil is down, the FRB of Dallas says the jobs of as many as 140k Texans are at risk, banks are writing off billions of dollars of loans to the energy sector and Texan oil companies are filing for bankruptcy almost every day, wouldn’t the conservative nature of a bank such as Wells Fargo’s appetite to invest in the energy industry change and decide to withdraw the funding despite the great opportunity it can create?

    It is not usual for a bank to speculate in such a market and without security?

    Of course if WF do decide to pull the funding (before we purchase something) – Maverick’s future would be very grim indeed – would it not?

    A few sources:

    Column 1
    0 The Rig count is down by 43% in 17 weeks
    << OLE Object: Picture (Device Independent Bitmap) >>

    1 March 18 report by the Federal Reserve Bank of Dallas – said “The jobs of as many as 140,000 Texans are at risk”.

    2 By Nick Cunningham of Oilprice.com Posted on Sun, 22 March 2015
    ”Since March 4 when oil prices began to fall again, an estimated $7 billion in high-yield debt from distressed energy companies was wiped out”.

    I look forward to your reply.



    Howard Selzer - CFO MAD replied:
    Thank you for your note. I would like to address some of your concerns. As you mention, rig counts are down along with the price of oil, but  banks have not written off billions of dollars of loans to the energy sector and Texas oil companies are not filing for bankruptcy almost every day. The banks are going through their regularly scheduled redeterminations in April. They don’t expect many, if not any, foreclosures as a lot of the reserves are based on SEC pricing which is more favorable. This will give companies time to clean up their balance sheets before the next determinations which are in October. Many of these companies are raising equity in the markets as there is a lot of capital in the US looking to invest in energy. The energy companies that have filed for bankruptcy are ones that have had debt problems for years (Quicksilver is a good example).

    The Wells Fargo contract is a commitment, it can’t be terminated by Wells Fargo without cause. Well’s is continually trying to deploy the money in the energy space at this time.

    Please let me know if I can help you with anything else related to this.


    From me again:
    Naysayers be warned - there is positive stuff here - lol
 
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