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Rex Energy Corporation REXX, which has been facing trying times of late, recently filed for Chapter 11 bankruptcy protection. Hit by the industry downturn, the company had been contemplating Chapter 11 filing for quite some time. Amid elevated leverage metrics, challenges in refinancing its 2020 debt maturities along with weak natural prices creating further pressure, the company is headed toward debt restructuring.
In fact, it has reached a restructuring support deal with 100% of its first-lien lenders and 72% of second-lien bondholders. U.S. oil and gas provider, Rex Energy believes that comprehensive debt restructuring will enable it to overcome the challenging times that the company has been facing. Rex Energy has secured $100 million in financing from first-lien lenders, which along with its operating cash flow would be sufficient for the company to maintain normal operations during bankruptcy proceedings.
Notably, the Appalachian Basin-focused company had got delisted from the Nasdaq stock market effective Apr 12. In its latest quarterly report, the company disclosed that it could not come into an agreement with the lenders, after it failed to make an interest payment in April. Apart from defaulting on the interest payment on its senior notes, Rex Energy also failed to supply timely financial statements and other important disclosures to its lenders.
Along with filing for Chapter 11, the company has simultaneously begun the divestiture process of its remaining assets to maximize its long-term prospects. It further intends to culminate its orderly sale process under the U.S. bankruptcy court by the next five months.
Grappling with debt woes, Rex Energy has already been pursuing divestment of assets to shore up its financials. In 2016, it offloaded its Illinois Basin holdings to become an Appalachian pure play. In 2017, it divested a considerable portion of its Ohio holdings to Antero Resources Corporation AR. Two months back, it entered into a $17.2 million deal to jettison its non-operated Appalachian oil and gas interests in Westmoreland, Centre and Clearfield counties in Pennsylvania.
Rex Energy has just been one of the victims of the 2014-2016 downturn in the oil and gas prices. Reportedly, around 144 companies have filed for bankruptcy protection amid declining oil prices. In fact, two other U.S. explorers, namely Nighthawk Production LLC and Enduro Resources Partners LLC, also filed for Chapter 11 last week.
Zacks Rank and Other Key Picks
Rex Energy currently carries a Zacks Rank #2 (Buy).
Rex Energy Corporation Price
Rex Energy Corporation Price | Rex Energy Corporation Quote
Other top-ranked players in the energy space include Bonanza Creek Energy, Inc. BCEI and Eclipse Resources Corporation ECR, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Bonanza Creek delivered an average positive earnings surprise of 215.36% in the last four quarters.
Eclipse Resources delivered an average positive earnings surprise of 133.33% in the trailing four quarters.
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