Reserves Question, page-6

I think this illustrates exactly what we are discussing. Breitburn Energy (BBEP) is the company.

http://www.bloomberg.com//news/2015...tburn-to-raise-debt-on-credit-line-pinch.html

"The company is considering tapping the loan market as it faces a potential reduction of the credit line when its ability to borrow, based partly on the value of its reserves, is reset in April, according to Jim Jackson, Breitburn’s chief financial officer. "

Now

"...If the credit line is reduced to below what’s already been borrowed, “we would have six months to close that gap,” he said. “We’re being very pro-active.”

it gets "interesting".

"Yields for speculative-grade energy borrowers were an average 9.6 percent yesterday after reaching a more-than five-year high of 10.4 percent in December, "

"...88 percent drawn so just a 10 percent cutback could prompt Breitburn to raise money to repay borrowings, according to a research note today from Bloomberg Intelligence analyst Spencer Cutter. "

but yet the CFO contends
"We’re in very early discussions with the lead bank,” Wells Fargo & Co., regarding the company’s borrowing base, Jackson said. Typically these discussions don’t get going until March. Banks consider both the value of oil and gas in the ground as well as the value of a company’s hedge portfolio", according to Jackson. “We have a very strong reserve base and a very valuable hedge portfolio,” he said.

The market doesn't think so.