❓How’s Oil and Gas Doing. (Spoiler Alert: Not Well)❓

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Callback to May 12’s “Fast Forward - Oil & Gas is SO 2019.” We wrote:

In March’s “Oil and Gas Continues to Crack (Long Houston-Based Hotels),” we wrote:

The bankruptcy waiting room is becoming standing room only for oil and gas companies despite oil resting near 2019 highs (even after a rough 2% decline on Friday). We’ve previously mentioned Jones Energy ($JONE), Sanchez Energy Corporation ($SN), Southcross Energy Partners LP ($SXEE), Vanguard Natural Resources, Alta Mesa Holdings LP ($AMR) and Chaparral Energy Inc. ($CHAP) in “⛽️Is Oil & Gas Distress Back?⛽️.” Based on earnings reports or other SEC filings this week, add Emerge Energy Services LP ($EMES), EP Energy Corporation ($EPE) and Approach Resources Inc. ($AREX) to the list.

And:

Here’s the bottom line: both amend-and-extended and formally restructured oil and gas companies were an option on oil prices. That option is out of the money for a number of these companies. The end result will be an uptick in Texas’ hotel reservations and bankruptcy fees. And soon.

We also wrote:

Legacy Reserves Inc. ($LGCY) is yet another E&P company that looks like it may be destined for the bankruptcy bin. The company announced this week that it is evaluating strategic alternatives. It subsequently filed its 10-K which included going concern language and, significantly, confirmation that the company’s lenders had agreed to extend the company’s maturity under its credit agreement from April 1 to May 31, 2019. This is like a good movie needing a bit more production time prior to theatric release: usually, the movie ultimately it gets released. Likewise, this will ultimately end up in bankruptcy court.

Let’s take stock of the bankruptcy bodybag count since then:

  • Jones Energy ✅;

  • Southcross Energy Partners LP ✅;

  • Vanguard Natural Resources ✅;

  • Sanchez Energy Corporation ✅;

  • Emerge Energy Services LP ✅;

  • Legacy Reserves ✅.

Meanwhile, EP Energy Corporation ($EPEG) reportedly just missed its $40mm interest payment due under the indenture governing its 8.000% 1.5 Lien Notes due 2025 (due on August 15, 2019). Of course, there’s also been a number of private oil-and-gas companies 

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Oil and Gas Continues to Crack

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Long Houston-Based Hotels

The bankruptcy waiting room is becoming standing room only for oil and gas companies despite oil resting near 2019 highs (even after a rough 2% decline on Friday). We’ve previously mentioned Jones Energy ($JONE), Sanchez Energy Corporation ($SN), Southcross Energy Partners LP ($SXEE), Vanguard Natural Resources, Alta Mesa Holdings LP ($AMR) and Chaparral Energy Inc. ($CHAP) in “⛽️Is Oil & Gas Distress Back?⛽️.” Based on earnings reports or other SEC filings this week, add Emerge Energy Services LP ($EMES), EP Energy Corporation ($EPE) and Approach Resources Inc. ($AREX) to the list.

Emerge Energy Services experienced some wild stock fluctuation this week after it filed a Form 12b-25 with the SEC indicating that was unable to timely file its FY 2018 Form 10K. Therein, the company stated that it has been distracted by negotiations with its revolving credit facility agent, PNC Bank NA, and second lien note purchase agreement agent, HPS Investment Partners LLC, on several forbearance agreements and amendments to the two agreements. Tee this baby up for a potential BK.

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