that loss is twice what they gained from their asset sale!!!!!!!!!!!
what happened???????????????????????
BCEI misses expectations Big Time
Re: BCEI misses expectations Big Time
BCEI's "Adjusted Net Loss" per share of $-0.17 compared to my forecast of $-0.23/share. Production during the quarter beat my forecast, but realized prices for natural gas and NGLs were way below what I had in the forecast.
This is why the stock got hammered today:
BCEI terminated its agreement with Meritage Midstream Services IV after the two
could not settle on terms to close the $255mn transaction. Meritage was expected
to pay $175mn on closing with the remaining $80mn due over a two-year period
contingent upon drilling commitments. BCEI is now looking to resume talks with
other interested parties.
Per BCEI:
Bonanza Creek announced the termination of its membership interest purchase agreement to divest its RMI subsidiary. In connection with the termination, Meritage Midstream is obligated to pay Bonanza Creek $6.0 million. Bonanza Creek plans to re-market the assets. With respect to its Mid-Continent asset, the Company currently has the asset held for sale and will provide an update on the divestiture process once it has entered into a definitive agreement related to the sale.
This is why the stock got hammered today:
BCEI terminated its agreement with Meritage Midstream Services IV after the two
could not settle on terms to close the $255mn transaction. Meritage was expected
to pay $175mn on closing with the remaining $80mn due over a two-year period
contingent upon drilling commitments. BCEI is now looking to resume talks with
other interested parties.
Per BCEI:
Bonanza Creek announced the termination of its membership interest purchase agreement to divest its RMI subsidiary. In connection with the termination, Meritage Midstream is obligated to pay Bonanza Creek $6.0 million. Bonanza Creek plans to re-market the assets. With respect to its Mid-Continent asset, the Company currently has the asset held for sale and will provide an update on the divestiture process once it has entered into a definitive agreement related to the sale.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: BCEI misses expectations Big Time
Stifel: "We are lowering our rating to Sell from Hold as we anticipate the stock will
underperform based on heightened balance sheet risk following termination of the
RMI transaction."
underperform based on heightened balance sheet risk following termination of the
RMI transaction."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: BCEI misses expectations Big Time
Assuming that they find another buyer the stock won't double to get back to where it was. As a stock I think this is a carcass.
Re: BCEI misses expectations Big Time
This is a classic example of what happens when a small-cap makes Wall Street analysts look bad to their clients. The analysts were all expecting Bonanza Creek to close the sale of their Rocky Mountain Infrastructure LLC (RMI) wholly owned midstream subsidiary and use the proceeds to shore up the balance sheet. Now that the sale won't close, Bonanza Creek has a much different looking balance sheet. THEY DO NOT HAVE A NEAR-TERM LIQUIDITY ISSUE (SEE NOTE BELOW).
Obviously, the midstream asset sale falling through is not a good development. However, just because Bonanza Creek could not close with the first potential buyer does not mean they will not find another buyer.
Bonanza Creek does not appear to have a near-term issue with its creditors. 4th quarter cash flow from operation (including cash settlements on hedges) was $49.9 million after interest payments on their debt of $14.3 million, $1.02/share compared to First Call's forecast of $1.10/share.
The company has plenty of liquidity: "Bonanza Creek has a $1.0 billion revolving credit facility, which has an approved borrowing base and commitment amount of $475 million. As of December 31, 2015, the Company had borrowings under its credit facility of $79.0 million, a letter of credit totaling $12.0 million, and cash totaling $21.3 million, resulting in total liquidity of $405 million under its current commitment amount. Bonanza Creek has two outstanding issues of unsecured high-yield bonds which consist of $500 million 6.75% senior notes due in 2021 and $300 million 5.75% senior notes due in 2023. As of December 31, 2015, the Company was in compliance with all financial covenants, with a senior secured debt to EBITDAX ratio of 0.3x, an interest coverage ratio of 4.8x, and a current ratio of 3.5x."
Bonanza Creek just gave production guidance for the first quarter and they are shutting down their drilling program in March. They will connect 12 wells to sales in Q1 so my forecast assumes only a slight decline in production in Q2. Operational results are actually fairly good.
First Call currently estimates cash flow per share from operations for 2016 of $1.60. My forecast model comes up with $1.46 CFPS for 2016, compares to $4.22 CFPS for 2015. The big decline is primarily because they now have very little oil hedged.
I have posted my updated forecast model to the EPG website. I do need to spend more time with this one and I want to go through the transcript of their conference call.
Obviously, the midstream asset sale falling through is not a good development. However, just because Bonanza Creek could not close with the first potential buyer does not mean they will not find another buyer.
Bonanza Creek does not appear to have a near-term issue with its creditors. 4th quarter cash flow from operation (including cash settlements on hedges) was $49.9 million after interest payments on their debt of $14.3 million, $1.02/share compared to First Call's forecast of $1.10/share.
The company has plenty of liquidity: "Bonanza Creek has a $1.0 billion revolving credit facility, which has an approved borrowing base and commitment amount of $475 million. As of December 31, 2015, the Company had borrowings under its credit facility of $79.0 million, a letter of credit totaling $12.0 million, and cash totaling $21.3 million, resulting in total liquidity of $405 million under its current commitment amount. Bonanza Creek has two outstanding issues of unsecured high-yield bonds which consist of $500 million 6.75% senior notes due in 2021 and $300 million 5.75% senior notes due in 2023. As of December 31, 2015, the Company was in compliance with all financial covenants, with a senior secured debt to EBITDAX ratio of 0.3x, an interest coverage ratio of 4.8x, and a current ratio of 3.5x."
Bonanza Creek just gave production guidance for the first quarter and they are shutting down their drilling program in March. They will connect 12 wells to sales in Q1 so my forecast assumes only a slight decline in production in Q2. Operational results are actually fairly good.
First Call currently estimates cash flow per share from operations for 2016 of $1.60. My forecast model comes up with $1.46 CFPS for 2016, compares to $4.22 CFPS for 2015. The big decline is primarily because they now have very little oil hedged.
I have posted my updated forecast model to the EPG website. I do need to spend more time with this one and I want to go through the transcript of their conference call.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: BCEI misses expectations Big Time
Their cost per barrel looks good compared to current and expected oil price. I think they will survive and see this as an opportunity to pick up some really cheap stock. Put me in the risk hungry column.
Re: BCEI misses expectations Big Time
bcei closed week at 2.12. doubling in a week is not dead money.
Re: BCEI misses expectations Big Time
Bonanza Creek accounts for their derivatives as investment activities. Therefore, the cash settlements show up in the Cash Flow Statement as "Cash From Investment Activities". I think some Wall Street analysts are missing this. Cash settlements on hedges were $131 million in 2015, 63% of total cash flow from operations. Including the settlements, cash flow per share was $4.22 in 2015.
If you listen to the Q4 conference call they say they should have a new buyer for the RMI assets in Q2. A dozen companies looked at it and most of them are still interested. If they sell it for anything close to the $255 million sales price to Meritage the share price will bounce back. First Call's price target of $5.22 is close to how I would value BCEI today.
If you listen to the Q4 conference call they say they should have a new buyer for the RMI assets in Q2. A dozen companies looked at it and most of them are still interested. If they sell it for anything close to the $255 million sales price to Meritage the share price will bounce back. First Call's price target of $5.22 is close to how I would value BCEI today.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: BCEI misses expectations Big Time
bcei up another 40% this am---love that dead money! 
Re: BCEI misses expectations Big Time
Laughing all the way to the bank on this one.......