Is Bonanza Creek Energy Inc. (NYSE: BCEI) Clueless?


Bonanza Creek Energy Inc. (NYSE: BCEI) has fallen short of the standards required for continued listing of its stock on the New York Stock Exchange (NYSE). Though the management provided an investor update on the matter, no clues were offered on how the company would work to regain compliance.

What is threatening Bonanza Creek Energy Inc (NYSE: BCEI)’s continued listing on the NYSE is its substandard stock price. The NYSE determined that for the 30-day period to August 22, the averaging closing price of Bonanza shares was only $0.98. That meant that the stock was in violation of the NYSE’s listing rules that require stocks to maintain a minimum closing price of at least $1.

To be deemed compliant, Bonanza must raise the minimum bid price on its shares to above $1 and maintain it there. Without that, the stock of BCEI could be delisted from NYSE.

Cure period

However, the delisting process doesn’t begin immediately. NYSE allows companies with substandard share price a six-month grace period to remedy their compliance standing. Bonanza Creek Energy Inc (NYSE: BCEI) has that opportunity and the management has hinted of plans to use the so-called cure period to regain compliance. However, no specifics have been provided about what exactly the management intends to do about the issue.

The available options

One of the options for Bonanza Creek Energy Inc (NYSE: BCEI) to regain compliance is reverse splitting its stock. That would see the company combine several shares to create one share with a higher value. However, sometimes shareholder approval is required before a company can go that route.

The other option would be for Bonanza to sit back and wait for its stock price to recover. However, that can be risky if investors do not see any compelling reason to bid up the stock yet there is limited time to regain compliance.

Interest on notes – Bonanza Creek Energy Inc. (NYSE: BCEI)

Though Bonanza Creek Energy Inc. (NYSE: BCEI) fell short of saying which remedy approach it favors to regain compliance, it did say that it managed to pay $8.6 million in interest on its unsecured notes coming due in 2023. The payment ensured that the company didn’t default on its debt obligation.


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