As predicted, 2015 ended in as bad a manner as imaginable for the oil industry. Patterson had been calling for this since September or October, warning investors ahead of time that the entire oil patch was going to “take a little break.” 2015 numbers are abhorrent.
So what’s next? Well, we can expect a mild reprieve to occur when first quarter 2016 numbers come in. But competition is still bloody and someone isn’t making it out of this alive.
On that note, BAS earnings contained a little glimmer of hope. Yesterday, apparently, BAS was given a life line of $165 million in term financing. They are going to use this to escape the atrocities awaiting anyone stuck in revolving credit facilities with asset value provisions attached to them.
On February 17, 2016, Basic entered into a Term Loan Credit Agreement with a syndicate of lenders and U.S. Bank National Association, as administrative agent for the lenders. This agreement provides for borrowings of an aggregate principal amount of $165.0 million on the closing date, and delayed draw term loan borrowings in an aggregate principal amount not to exceed $15.0 million. The obligations under the Term Loan Agreement will be secured by substantially all assets of Basic. Basic expects to borrow the initial borrowings of $165.0 million under the Term Loan Credit Agreement on February 26, 2016, subject to the satisfaction of closing conditions.
The term loan will bear interest at 13.5%. In addition, Basic will be responsible for the applicable lenders’ fees, including a closing payment equal to 7.0% of the aggregate principal amount of the commitments.
In conjunction with this financing, Basic intends to amend its existing revolving credit agreement, reducing the aggregate commitment from $250.0 million to $100.0 million.
Pro forma liquidity as of March 31, 2016, including this term loan would be approximately $220.3 million, including $23.1 million of availability under Basic’s amended $100 million revolving credit facility.
Unfortunately, BAS also burned $10 million in the fourth quarter. And I’m guessing this time Patterson wasn’t making an eccentric corporate buyout.
Your move, other companies. Let’s see who dies first.