Shares in Basic Energy Services, Inc (NYSE:BAS) leapt higher by over 18% to $0.6197 on Wednesday after investors appreciated the move by the company’s lenders extended the date for negotiations regarding a “deleveraging transaction” to October 16, 2016.
Also giving a boost were glad tidings from OPEC. At its meeting in Algiers the oil cartel arrived at an agreement to curtail production in an effort to support prices.
Not surprisingly, US crude jumped over 5%. The S&P 500 energy sector surged over 4%, welcoming the news of OPEC limiting production to 32.5 million barrels per day.
Energy players, big and small, saw smart improvements in their stock prices, Basic Energy included.
Basic Energy Services, Inc (NYSE:BAS) lent a hand by creditors
Investors may recall that earlier in September Basic Energy notified the SEC of its inability to make an interest payment amounting $18.4 million on its 7.75% senior notes due 2019.
However, it was then able to enter into a forbearance agreement with 81% of its creditors allowing a 30 day grace period to make payments, i.e. until September 28.
President and CEO of Basic Energy Services, Roe Patterson, had then said: “The forbearance agreement and temporary waivers will provide additional time to reach a mutually acceptable financial restructuring plan that provides Basic with a sustainable capital structure…”
Well, October 28 has come and gone and Basic Energy is still continuing its negotiations.
However, it assures that it has “ample liquidity to continue efficient and uninterrupted operations in the ordinary course and meet all of its obligations to suppliers, customers, and employees.”
Basic Energy Services, Inc (NYSE:BAS) quarterly numbers
For the second quarter 2016 Basic Energy reported EPS of $-1.34, which missed by $0.08, and revenue of $120 million, which disappointed by 0.75 million.
“Our extensive efforts to reduce cost, limit capital spending, preserve liquidity and scale our business to fit the current level of customer activity have shown a meaningful impact to our bottom line,” said Mr Patterson on the earnings call. “However, we will need to see substantially higher utilization levels, before we receive the pricing improvements needed to reach our financial goals.”
“I believe stable oil prices above $50 per barrel are needed to bring about this shift,” he added.
After the latest OPEC meeting, we may be getting there.