Carusso does that article that came out sound anything like these post I made last Friday Mar 11 before the article.
dude iligence Friday, 03/11/16 02:50:23 PM
Re: None
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Here's what happened today. From the financials last month SGY had $500 million borrowing base. They had only borrowed 10.8 mil of it. That $500 available was based on crude at last years much higher price. From the financials last month.
Liquidity
At December 31, 2015, Stone had cash on hand of $10.8 million and $480.8 million available for borrowing under its bank credit facility, based on a borrowing base of $500 million and outstanding letters of credit outstanding of $19.2 million. As of February 22, 2016, we had cash on hand of approximately $23 million and approximately $50 million drawn on the bank credit facility. Including the $19.2 million of letters of credit outstanding, there is approximately $431 million available for borrowing as of February 22, 2016. The borrowing base was affirmed at $500 million in October 2015 and is scheduled to be redetermined by May 2016. We are expecting a borrowing base reduction for the May 2016 redetermination.
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Todays news
Stone Energy Corporation Provides Bank Borrowing Update
Stone Energy (NYSE:SGY)
Intraday Stock Chart
Today : Friday 11 March 2016
LAFAYETTE, La., March 10, 2016 /PRNewswire/ -- Stone Energy Corporation (NYSE: SGY) today announced that it has borrowed $385 million under Stone's Bank Credit Facility, which represents substantially all of the remaining undrawn amount that was available under the Credit Facility. These funds are intended to be used for general corporate purposes. As of March 10, 2016, following the funding of this borrowing, the aggregate principal amount of borrowings under the Credit Facility was $477 million. This is in addition to approximately $19 million of outstanding letters of credit. The bank borrowings will initially bear an interest rate of approximately 5 percent. On March 10, 2016, the banks provided notice to Stone under the Credit Facility of a request for a borrowing base redetermination. Stone expects that the borrowing base will be reduced to an amount below the current borrowings.
Chairman, President and Chief Executive Officer David Welch stated, "We felt it important to increase our liquidity in the current low price commodity environment to ensure we have adequate financial flexibility. We will continue to explore various options to strengthen our balance sheet, including alternatives to address our debt position."
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SGY's borrowing base was about to come up for review and potentially be reduced due to the lower crude prices. SGY management took proactive measures and went ahead and borrowed all the money available prior to that review. That doesn't mean the money has been spent quite the opposite it is just guaranteed that it is available for future use.
The key is increasing crude prices. If crude recovers to $50-$60 the picture for these small companies will look much different than it did at $26, right when they did financials. The current projections for earning are based on the price of crude below $30 so next earning could be well above if crude continues to rebound. Stocks are priced on future. Is the worst behind for SGY? If so this pullback to $2 is a buying op. Also SGY ran from $1.26 to $3.7, a 62% retracement is $2.18. SGY FWIW I just picked up some shares around $2.05ish. Also there is a 432k buy spike on the 1 min chart at 14:44.
Crude is going into the $40s IMO As always use stop limits
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dude iligence Friday, 03/11/16 03:24:11 PM
Re: dude iligence post# 277
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Heres what is about to happen in the oil patch. All the companies are going to have their borrowing base re-evaluated and subsequently lowered. Imagine that you are running a company and you have a credit line available that you are needing to dip into due to low crude prices. Then all of a sudden your credit available is shut off, as in no more money available. You have made all kinds of production cuts and idled rigs. But now crude prices are moving higher much higher and you don't have any credit to put your rigs back in action. They companies that have cash available will be able to take advantage of the rebound in crude, those that don't will go tits up.
This is how the oil boom busts. I had this explained to me back in the early 80s during the height of the oil boom by a guy that had seen several boom bust cycles. He started his own company while he was a senior in High School. His company had zero debt and survived the bust of the 80s.
SGY's management made a shrewd move by pulling all the money out while it was still available. If they hadn't in about 4-6 weeks they would be in the situation that a lot of other oil companies are going to be in when the credit line closes.
Think of it like a home equity line of credit that were very popular prior to the housing boom bust. Those lines dried up over night and still aren't available. Banks move very slowly Oil could go to $80 and banks would not lend money to oil producers. It will be a matter of wait and see. That alone will kill off many companies.
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Heres the article that you read it came out yesterday 17 march.
LPC: Energy companies drain loans before banks clamp down
Reuters
21 minutes ago
By Lynn Adler
NEW YORK, March 17 (Reuters) - Troubled US energy companies, maneuvering for stronger negotiating positions if filing for bankruptcy, are racing to tap cash still available under existing reserve-based loan commitments before banks cut their credit access next month.
In April, lenders, in semi-annual valuations of oil and gas reserves backing these loans, are expected to cut available credit to many energy companies based on deeply depressed collateral prices.
Earlier in March, Stone Energy joined a growing pack of companies, including SandRidge Energy and Linn Energy, drawing down the full amount remaining under its credit facility. Stone also said its borrowing base likely will be cut below its current borrowings during the spring redeterminations.
"Every company out there is nervous that if they don't draw in the next couple of weeks, with determinations coming up, banks will finally start saying 'no,'" an investor said.
Drawing down cash before banks' contractual commitments change is a tactic used widely in other previously troubled industries, including autos and airlines.
These "extraordinary draws" are a new concept in the oil and gas sector, said Buddy Clark, partner at Haynes and Boone in Houston.
Without sufficient cash, a company in bankruptcy would typically need debtor-in-possession (DIP) financing.
"When providing a DIP, lenders will want to button down everything that hasn't already been pledged as collateral," he said. "Having unencumbered assets in a bankruptcy gives the debtor a bargaining chip with the various constituents at the table, which they would likely have to give up in order to get a DIP loan."
NYSE10:03AM EST
LPC: Energy companies drain loans before banks clamp down Reuters 21 mins ago
Stone Energy (SGY) Stock Sinking as Oil Prices Slide TheStreet q 1 day 20 hrs ago
More
About one-third of all energy companies may fail unless prices recover, consulting firm Deloitte said last month.
More than a dozen companies, with debt totaling up to US$17bn to US$19bn, are already in default on interest payments, said Clark.
"There's just an incredible amount of money out there that's exposed under these reserve-based loans," he said. "Even if oil prices were to bounce up to US$50 or US$65, a lot of these companies are already mortally wounded. A lot of them are looking for options, and bankruptcy is one of the obvious options."
Banks are seen clamping down more aggressively on reserve-based lending than last fall, based on extended asset price weakness.
SLIPPERY SLOPE
Stone Energy, one of the most recent examples, in announcing its revolver draw also said it had hired Lazard and Latham & Watkins to help review strategic alternatives.
"Fully drawing down an asset-based loan revolver is a very strong indicator that some sort of bankruptcy or restructuring is coming for troubled commodity sector companies," said Sharon Bonelli, senior director, leveraged finance, at Fitch Ratings.
Typically, companies exceeding their maximum borrowing base because of a downward redetermination have a set period to reduce overages to get back into compliance.
"They could do that by paying down debt if they could raise new capital, which would be very difficult for an energy company right now from a debt market offering, or they could try to sell an asset," Bonelli said. "If they can't reduce the overage, then that's a default."
Defaults are seen escalating. The impact will be less in the loan market than in the high-yield bond market, which has at least triple the exposure to oil and gas companies.
ADDING PROTECTIONS
In addition to cutting revolving credit access, and holding more reserves to buffer losses, banks are seen adding new protections.
"Going forward, we're seeing banks requiring borrowers to agree to new anti-hoarding provisions, which prevent borrowers from drawing down the full amount of availability under their loans and sitting on the cash," said Clark. "Anti-hording provisions permit borrowers to draw what they need to use for operations but not to build a war chest for a company readying itself for bankruptcy."
Ultimately, new oil and gas company loans will tougher to get, industry experts agree.
"It will be harder for non-energy focused banks to want to participate in the industry, if they have to go fight for their money in this downturn," the investor said.
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SGY should have followed the lead of FCX and focused on cost cutting salary cuts performance based stock options and most important sell some of their oil and NG assests to pay down debt. They didn't do that why? They recently hired a legal firm that will most likely make the most money in a restructuring//bankruptcy situation. Lawyers don't give a rats azz about shareholders they are expendable.
I was SGYs one and only best cheerleader, Not anymore I am now their Number one basher. They screwed every shareholder when they decided to raise the AS.
There is only one reason to raise the AS. Dilution
The share structure of 57 mil OS and 52 mil float was the best thing this stock had going for it. That combined with min of 25% institutional holding at any given time. Hedge Funds trading SGY all day everyday created instant in and out liquidity with great price moves.
That is all going away
The low Float to become the bloated float
The institutions are dumping shares all this week and will continue
The Hedge Funds are shorting the crap out of this now with one goal in mind. Drive it into the dirt.
Management spoke loud and clear they don't care about the shareholders they are going to reduce the value of your shares by 6 fold then rs them and do it again. SGY will become a diluted POS PennyStock in a dying US industry oil and ng producers. Pennystocks are sector and pr news driven. Last good Pennystock rally was MJ in 2014. Now its all just dilution garbage. Put out news pump the stock dump shares to fund operations(salaries lie about operations) I see a major problem for SGY management they don't know how to write a decent pr. They will have the attitude they are above all that after all they used to be on the NYSE (enjoy it while it lasts)
What bank will ever lend them money after what they did today and pulling the cash out last week? NONE.
YO will be in every sentence from the guys that lend them money in the future. Convertable debt where the lenders get paid interest in shares at conversions as low as .0001 per share. This is the kind of future for SGY shareholders.
SGY F'd all the shareholders and lenders at the drive thru this week.
I got stopped out yesterday when this dropped below $1.54 ($1.55 2009 low) next target $1.26 for weakdick bounce then the assualt on $1 before testing the waters (sewer) of Diluted POS Pennyland.
AI
