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Bonanza Creek Likely to Exit Bankruptcy with Debt Clearance
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Denver-based upstream player Bonanza Creek Energy Inc. recently announced that the U.S. Bankruptcy Court in Delaware has approved of the company’s restructuring plan following which the company expects to emerge from bankruptcy by the end of this month. Upon the successful completion of the financial restructuring, the company is likely to emerge as a deleveraged company with better financials.
Due to the decline in oil prices since 2014, most of the upstream companies have been facing difficult times with reduced activities which have created pressure on their revenues, earnings and cash flows. With oil prices now almost half from the prior highs of $100 per barrel, the companies are highly concerned about the borrowings which seemed a prudent move back then. Carrying a heavy debt burden, Bonanza Creek is one of the many victims of the downturn who had filed for bankruptcy protection.
Bonanza Creek had filed for Chapter 11 bankruptcy protection on Jan 5 to protect the company’s restructuring deal from the distressed debt investors and enable it to pursue its debt for equity swap.
The restructuring agreement with lenders would convert the company’s $867 million debt to equity. In addition, the plan also calls for an infusion of $200 million in new equity through rights offering. Further, it will also eliminate $50 million in the annual interest payments.
Bonanza Creek currently has drilled six uncompleted wells in Wattenberg. It is expected that the equity offering of $200 million will help in the completion of these wells. Most likely the company will resume the operations when it emerges out of bankruptcy.
Zacks Rank and Key Picks
Headquartered in Colorado, Bonanza Creek is engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the United States.
Bonanza Creek reported average negative earnings surprise of 21.5% in the last four quarters.
The company currently carries a Zacks Rank #4 (Sell).
Better-ranked players in the same industry include Antero Resources Corporation (AR - Free Report) , Penn Virginia Corporation and Concho Resources Inc . While Antero Resources and Penn Virginia sport a Zacks Rank #1 (Strong Buy), Concho Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Resources reported positive earnings surprise in each of the preceding four quarters, the average being 239.10%.
Penn Virginia posted a positive average earnings surprise of 36.67% in the trailing four quarters.
Concho Resources posted a positive average earnings surprise of 310.74% in the last four quarters.
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Bonanza Creek Likely to Exit Bankruptcy with Debt Clearance
Denver-based upstream player Bonanza Creek Energy Inc. recently announced that the U.S. Bankruptcy Court in Delaware has approved of the company’s restructuring plan following which the company expects to emerge from bankruptcy by the end of this month. Upon the successful completion of the financial restructuring, the company is likely to emerge as a deleveraged company with better financials.
Due to the decline in oil prices since 2014, most of the upstream companies have been facing difficult times with reduced activities which have created pressure on their revenues, earnings and cash flows. With oil prices now almost half from the prior highs of $100 per barrel, the companies are highly concerned about the borrowings which seemed a prudent move back then. Carrying a heavy debt burden, Bonanza Creek is one of the many victims of the downturn who had filed for bankruptcy protection.
Bonanza Creek had filed for Chapter 11 bankruptcy protection on Jan 5 to protect the company’s restructuring deal from the distressed debt investors and enable it to pursue its debt for equity swap.
The restructuring agreement with lenders would convert the company’s $867 million debt to equity. In addition, the plan also calls for an infusion of $200 million in new equity through rights offering. Further, it will also eliminate $50 million in the annual interest payments.
Bonanza Creek currently has drilled six uncompleted wells in Wattenberg. It is expected that the equity offering of $200 million will help in the completion of these wells. Most likely the company will resume the operations when it emerges out of bankruptcy.
Zacks Rank and Key Picks
Headquartered in Colorado, Bonanza Creek is engaged in the acquisition, exploration and development of onshore oil and natural gas properties in the United States.
Shares of Bonanza Creek fell 46% over the last three months, more than the Zacks categorized U.S. Oil and Gas Exploration and Production industry’s decline of 10%.
Bonanza Creek reported average negative earnings surprise of 21.5% in the last four quarters.
The company currently carries a Zacks Rank #4 (Sell).
Better-ranked players in the same industry include Antero Resources Corporation (AR - Free Report) , Penn Virginia Corporation and Concho Resources Inc . While Antero Resources and Penn Virginia sport a Zacks Rank #1 (Strong Buy), Concho Resources carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Antero Resources reported positive earnings surprise in each of the preceding four quarters, the average being 239.10%.
Penn Virginia posted a positive average earnings surprise of 36.67% in the trailing four quarters.
Concho Resources posted a positive average earnings surprise of 310.74% in the last four quarters.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>