$9 Mill in the bank you say ? why then are they looking for...

$9 Mill in the bank you say ? why then are they looking for finance?

Part of a research note

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One of the key aspects of course is how this re-entry work is financed, which we addressed in our earlier note. To reiterate, we believe that the equity raising option is unlikely for MXO, although the market certainly seems to believe that such an issue is likely and is discounting the stock accordingly. Instead, we believe that MXO is exploring other financing options, one of which could potentially involve MXO allowing the recovery of costs from future oil production. This would enable full repairs to be completed and production resumed without any associated dilution of existing MXO shareholders. Such an arrangement could be a short-term one, or indeed could potentially extend into some form of ongoing strategic relationship. The company confirmed yesterday that it is in negotiations with such a party and we await the outcome of these negotiations with great interest.