RE:RE:RE:BXE unlikely to remain a going concern due to crushing debt Grey4554 wrote: Nope. Read these boards. Most of you guys don't understand what an RBL is or PDP PV 10. The catalyst is this RBL review that is ongoign now through April with the syndicate. Tick Tock.
The debt is at least 2x the notional of what the assets are worth.
I've heard one of the lenders on the revolver wants to tip this thing over, go to full liquidation.
In which case equity holders will most likely get nada, possibly something nominal like a nickel.
Interesting. Confession: not totally familiar with RBL or PDP PV 10. I've Googled it, and I have:
"...reserves-based lending (RBL), a type of asset-based lending, for Oil and Gas working capital needs. RBL facilities are a type of specialized loan collateralized by the value of the borrower's oil reserves. Thus, a fundamental component of RBL facilities is the valuation of the borrower's oil and gas reserves, which determine the amount of credit the lender will extend to the borrower."
and PDP PV 10:
"...means,...Proved Developed Producing Properties described as...net present value, discounted at ten percent (10%) per annum, of the future net revenues expected to accrue to the Borrower's and Guarantors' collective interest in such Oil and Gas Properties during the remaining expected economic lives of such Oil and Gas Properties."
Seems to me, that a syndicate cannot "tip it over into liquidation". Have they got enough debt outstanding to move BXE into bankruptcy protection? I say no...now clearly a covenant default can do that which triggers the transfer of assets from the juniour common stock holder to the senior debt holder. But that's further out in the future.
Clearly, BXE has a lot of debt. But, their assets are proven, so is it possible the RBL and the PDP PV 10 models you are looking at discount for too much? Natural Gas scenarios over the medium and long term, where the true investors are placing bets is positive. So there has to be debt and equity providers with this mindset that can come into play. Short term players will be freaking out yes, but not medium/long term players. Spirit River assets are amongst the best in the industry. It seems to me that if Steve Toth isn't working the phones looking for deals (i.e. selling assets, jv assets, other debt, etc.) I would be surprised. All it takes is a partner that has a medium to long term focus and a new debt or JV deal will answer the short term debt challenge and send the stock rocketing.
So, the question is, will they or won't they? It is tick tock tick tock! C'mon Steve Toth, work those phones baby!! I say he comes through. There has to be "big" long term money that will save them.