EXCO Looks to “Restructure” (Sell?) 150K Marcellus Acres
Just yesterday we brought you the news that (no surprise) EXCO Resources has suspended any more drilling in their 150,000 acres of Marcellus acreage (see EXCO Resources Continues Marcellus Drilling Moratorium in 1Q15). EXCO’s newly appointed executive chairman, who also happens to be Bluescape’s executive chairman (along with other EXCO top management), held an analyst call to discuss first quarter results and the call was peppered with references to “restructuring.” We count at least 15 “restructuring” references in the call transcript. Among the things that will potentially get “restructured” is EXCO’s Marcellus joint venture with BG Group. BG is being bought out by Shell (see LNG Love Story: Shell Makes Play to Buy BG in $69.7B Megamerger). In light of that buyout, EXCO is looking to “restructure” their deal–by which we take to mean they’re shopping their Marcellus acreage. The term “Appalachia” came up a few times on Wednesday’s analyst phone call…
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David Fessler is energy and infrastructure strategist (i.e. stock analyst/researcher) with The Oxford Club–a publisher based in Baltimore, Maryland that publishes the Oxford Resource Explorer, among other financial publications. Fessler spends his days immersed in the energy industry and in the stocks of companies in that industry. Fessler and The Oxford Club have produced a special report called “The Oil Company Death List” which is a list of 19 publicly-traded oil and gas companies that, according to a formula worked out by Fessler, will “die soon.” That is, they’ll go bankrupt if they don’t sell themselves or otherwise sell off major assets. Why? They’re “swimming in debt” and way over leveraged with “ugly balance sheets.” Fessler’s simple formula is all about a company’s debt ratio. When a company’s debts reach 4 times or higher its earnings (EBITDA), that’s a huge red flag. Below we have the list of 19 on the “death list” along with a copy of Fessler’s full report (describing his methodology). The interesting/troubling aspect is that 8 of the 19 are Marcellus/Utica operators–one of which is #1 for highest debt-to-earnings ratios. Some companies in the list surprised us–others did not. Is your favorite Marcellus/Utica driller in the list?…
Debtwire is an interesting service. They keep an eye on publicly traded companies to give subscribers to their service a heads-up on which companies are potentially carrying too much debt–companies that may, due to changing economic circumstances, have a hard time paying back that debt. Think of Debtwire as an early warning system to let you know BEFORE Moodys or Fitch Ratings downgrades a company’s credit rating. Later this month Debtwire will issue a new Distressed Watchlist with 176 companies on it. Some 55 new companies will be added to the list from the energy industry alone. With the addition of the 55 new companies, the Distressed Watchlist will have 70 (of 176) companies from the energy industry–making 40% of the list top heavy with energy companies. We have what we believe is an MDN exclusive–Debtwire has sent us the top 20 energy-related companies on the list. Of the top 20, four of them have operations in the Marcellus/Utica region…
At the end of an article about EQT, Seeking Alpha blogger and energy analyst Richard Zeits includes a short list of companies who either already belong, or soon will join, the “1 billion cubic feet per day club” of Marcellus Shale gas production.