Bonanza Creek Energy (BCEI) Misses Q3 EPS by 7c

Bonanza Creek Energy (NYSE: BCEI) reported Q3 EPS of ($0.35), $0.07 worse than the analyst estimate of ($0.28). Revenue for the quarter came in at $49.3 million versus the consensus estimate of $52.32 million.

Debt and Liquidity

The Company has a $1.0 billion revolving credit facility, which was redetermined on October 31, the "Redetermination Date" to an approved borrowing base and commitment amount of $150 million. As of September 30, 2016, the Company had borrowings under its credit facility of $229.3 million and cash totaling $133.4 million. As the outstanding borrowings on the credit facility exceed the newly redetermined borrowing base, the Company, under the terms of the agreement, has 20 days from the Redetermination Date to notify the bank group of its intended method to cure the deficiency. To cure the deficiency, the Company may elect to, a) repay advances such that the deficiency is cured within a 30-day period, b) pledge additional oil and gas properties acceptable to the lenders to eliminate the deficiency, c) elect to repay the deficiency amount in 6 equal monthly installments, or d) a combination of options b and c. As of the end of the third quarter, the Company had two remaining deficiency payments payable to the bank group related to its borrowing base deficiency resulting from the May 20, 2016 redetermination, the first of which was paid on October 13, 2016, with the last payment due in November.

As of September 30, 2016, the Company was not in compliance with its interest coverage ratio covenant under its credit facility. The interest coverage ratio as set forth in the credit facility is to remain above 2.5x. At the end of the third quarter, the Company's interest coverage ratio was 2.3x. The Company is currently in discussions with its credit facility lending syndicate to negotiate a waiver, amendment or forbearance agreement. If the Company is unable to obtain one of the aforementioned remedies, the lenders could give notice of acceleration as a result of this non-compliance. The Company was in compliance with its remaining two financial covenants under its credit facility, with a senior secured debt to TTM EBITDAX ratio of 1.7x, and a current ratio of 2.4x. The Company's credit facility covenants require a secured debt to TTM EBITDAX ratio of less than 2.5x and a current ratio of greater than 1.0x.

On November 8, 2016, the Company made the bond interest payment on its $500 million issue of 6.75% senior unsecured notes to the indenture trustee, which was due on October 15, 2016. By making the $17.0 million interest payment within the 30-day grace period, the Company remains in compliance with its senior unsecured notes.

The Company continues to work with its advisors, and is currently in discussions with various stakeholders, regarding a potential (i) debt for equity exchange or (ii) private secured financing transaction.

For earnings history and earnings-related data on Bonanza Creek Energy (BCEI) click here.

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