New Source Energy Partners L.P. (NUSPQ)

[Timothy Smith]

New Source Energy (NYSE:NSLP) is downgraded to Sell from Hold with a zero price target at Wunderlich, citing a likely worse than expected borrowing base redetermination, magnified liquidity concerns, and ongoing litigation with NSLP's contract exploration and production operator.

Based on NSLP's recent announcement, the firm expects the redetermination to lead to a reduction of $23M-$25M in the borrowing base, which would leave the company overdrawn by $16M-$18M.

NSLP said yesterday it was unable to pay the quarterly cash distribution on its 11% series A cumulative convertible preferred units due to a pending borrowing base deficiency under its revolving credit facility.