The credit facility remains undrawn, so this isn’t a big deal. However, it does lessen the companies ability to weather very turbulent storms, should they present themselves.
Co announced that it has successfully completed the semi-annual borrowing base redetermination of its revolving credit facility maturing in April 2020.
The bank group has set a borrowing base of $335 million, an 11% reduction from the previous borrowing base of $375 million.
There were no changes to the terms or conditions of the Facility.“We remain financially well-positioned with an undrawn credit facility, over $100 million of cash on hand, and nearly two-thirds of our 2016 oil hedged at approximately $80 per barrel.”
The next regularly scheduled borrowing base redetermination will occur on or about October 1, 2016.
If I owned this stock, I’d be very interested to find out when those $80 crude hedges expire. Many oil companies took these hedges when the bottom dropped out of crude. But many of said hedges are set to expire soon, FYI.
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This is just the tip of the iceberg. An article written by Gary Ashton in March for Investopedia states: “A widely publicized report from the management consulting firm Deloitte says around 35% of public oil companies globally are at risk of slipping into bankruptcy in 2016. Deloitte surveyed 500 companies and found that 175 are facing “a combination of high leverage and low debt service coverage ratios.” Deloitte says that the 175 companies it identified have amassed a total debt load of over $150 billion, or roughly 8x the amount of defaulted debt by US oil and gas companies in 2015. The New York Times reports that as many as 150 oil and gas companies could file for bankruptcy in 2016, according to the energy research firm IHS.”