After I listened to a replay of their conference call, I've made some minor adjustments to my forecast model and reposted it to the EPG website.
My valuation for BCEI is now $6.05, compared to First Call's price target of $5.22. This is not a micro-cap, BCEI has ~25,000 boe per day of production. 2015 CFPS was $4.22.
My valuations will go up if they find a new buyer for the midstream assets, which they sounded very confident of doing on the conference call. IMO the Wall Street gang reads too much into it when a Buyer walks away from a previously announced deal. There are a lot of moving parts and it usually has nothing to do with the asset because the due diligence work was already done before they announced it. Most of the time it is because the buyer's funding ran off.
Bonanza Creek (BCEI)
Bonanza Creek (BCEI)
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Bonanza Creek (BCEI)
DENVER, March 10, 2016 (GLOBE NEWSWIRE) -- Bonanza Creek Energy, Inc. (BCEI) announces it has elected to draw down $209 million on its credit facility, and currently has an aggregate of $300 million of borrowings, including a $12 million letter of credit, under the facility. As of March 9, 2016, the Company had $235 million of cash on its balance sheet after taking the recent draw into account. The Company also restructured its hedge book, eliminating in-the-money 3-way collar contracts in favor of crude oil hedges with a combination of in-the-money floor and above market fixed price contracts for the period April through December of 2016.
Richard Carty, President and Chief Executive Officer, commented, “Our recent election to draw down $209 million on our revolver was a risk management decision structured to mitigate exposure to capital market externalities in 2016. We are pleased to be working with our committed and supportive commercial bank syndicate in this regard. In addition, we elected to protect 2016 cash flows by monetizing our 3-way collars to fund the purchase of in-the-money floor and above market swap contracts. These recently purchased contracts represent greater than 80% of our forecasted Rockies oil production for the balance of 2016. The supplemental cash on our balance sheet reinforces our liquidity position while our team works to execute dispositions of our Mid-Continent assets and our Rocky Mountain Infrastructure subsidiary. Collectively, these measures are proactive steps taken by the Company to reduce our downside exposure to risks not in our direct control, and aim to preserve value for stockholders in the event of a recovery in business conditions.”
Prior to the announced draw on the credit facility, the Company’s outstanding borrowings had remained unchanged since November 9, 2015. Additionally, the Company has been primarily operating within cash flow from operations since year-end. The Company has a current cash position of $235 million compared to a cash position of $21 million at December 31, 2015. After the recent draw, the Company remains in compliance with the incurrence covenants under the indentures related to its senior unsecured notes.
Richard Carty, President and Chief Executive Officer, commented, “Our recent election to draw down $209 million on our revolver was a risk management decision structured to mitigate exposure to capital market externalities in 2016. We are pleased to be working with our committed and supportive commercial bank syndicate in this regard. In addition, we elected to protect 2016 cash flows by monetizing our 3-way collars to fund the purchase of in-the-money floor and above market swap contracts. These recently purchased contracts represent greater than 80% of our forecasted Rockies oil production for the balance of 2016. The supplemental cash on our balance sheet reinforces our liquidity position while our team works to execute dispositions of our Mid-Continent assets and our Rocky Mountain Infrastructure subsidiary. Collectively, these measures are proactive steps taken by the Company to reduce our downside exposure to risks not in our direct control, and aim to preserve value for stockholders in the event of a recovery in business conditions.”
Prior to the announced draw on the credit facility, the Company’s outstanding borrowings had remained unchanged since November 9, 2015. Additionally, the Company has been primarily operating within cash flow from operations since year-end. The Company has a current cash position of $235 million compared to a cash position of $21 million at December 31, 2015. After the recent draw, the Company remains in compliance with the incurrence covenants under the indentures related to its senior unsecured notes.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Bonanza Creek (BCEI)
It looks to me as if bcei might be in the top 3 or 4 of your faves in order of upside. Would you agree with that, generally speaking?
Re: Bonanza Creek (BCEI)
For now, I rate BCEI a HOLD. I don't think the stock will do much until they find a buyer for the RMI assets.
I need to spend more time looking at it to see how what they did with their hedges impacts cash flow.
I need to spend more time looking at it to see how what they did with their hedges impacts cash flow.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group