PETITION

Speaking of borrowing bases and being f*cked, there’s also Alta Mesa Holdings LP(“AMH”), a Houston-based E&P company focused on the Anadarko stack. See, the funny thing about asset-backed loans is that when the asset quality deteriorates, a bank, to no one’s surprise, wants to reduce its credit exposure and borrower risk. This is why lenders bake in “redetermination rights” into their credit documents; they want the flexibility to ratchet down their commitment to a borrower should the borrower, say, sh*t the bed in a big big way.

In case you haven’t been paying attention, oil and gas, as an industry, has been sh*tting the bed in a big BIG way.

Hence, Alta Mesa’s SEC filing earlier this week that it received notice pursuant to its credit agreement, that the borrowing base has been reduced from $370mm to $200mm. YIKES.

Let’s, for sh*ts and giggles, parse out the filing, shall we?

“AMH’s combined borrowings and letters of credit outstanding exceed the new borrowing base by $162.4 million.”

PETITION Note: Ruh roh. Just like that, the lenders have put the squeeze on AMH. AMH meet world of hurt. World of hurt, meet AMH.

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