@tt2000
IMO the other company to watch is PVAC ... potentially same issue as LONE (and/or SNDE). They also have an April BB redetermination. Their credit facility is $500M drawn to about $365M (as at Dec'19). They are covenant lite on the Facility, with just the same 1:1 Current Ratio and maximum Total Debt to EBITDAX of 4:1 which is the same as LONE
On their covenant calc for Current Ratio, PVAC get to count the unused portion of facility (~$135M) as current asset for purposes of calculation and so comply on that basis. But if it gets cut to say $400M then they breach on the basis of Dec'19 financials.
The definition in LONE Credit Facility is
so they also get to count the unused amount of the facility ... but even that doesn't help. Note is excludes hedge/derivatives accounting (that's the reference to ASC 815).
In case anyone's misplaced or forgotten the covenants in the SNDE Credit Facility
https://www.sec.gov/Archives/edgar/data/1326089/000110465920003957/a20-3203_1ex10d1.htm#Exhibit10_1_092459
I would be doing that math if I held a sizeable position in SNDE. Q1'20 was a tough Qtr, and even with great hedging (see LONE Q1 results) it isn't enough.
My guess is SNDE may have the same problem with Current Ratio as does LONE and likely PVAC
Now can "additional debt" be incurred from say the Fed? Have to read the credit facility closely. It is restrictive but could you borrow from the Fed to repay the credit facility?
