Bonanza Creek Energy elected to draw down $209 million on its credit facility, and currently has an aggregate of $300 million of borrowings, including a $12 million letter of credit, under the facility. According to a related 8-K filing, the lender group is led by KeyBank as administrative agent. As of March 9, 2016, the company had $235 million of cash on its balance sheet after taking the recent draw into account.
The company also restructured its hedge book, eliminating in-the-money 3-way collar contracts in favor of crude oil hedges with a combination of in-the-money floor and above market fixed price contracts for the period April through December of 2016.
Richard Carty, president and CEO, commented, “Our recent election to draw down $209 million on our revolver was a risk management decision structured to mitigate exposure to capital market externalities in 2016. We are pleased to be working with our committed and supportive commercial bank syndicate in this regard. In addition, we elected to protect 2016 cash flows by monetizing our 3-way collars to fund the purchase of in-the-money floor and above market swap contracts. These recently purchased contracts represent greater than 80% of our forecasted Rockies oil production for the balance of 2016.”
Prior to the draw on the credit facility, the company’s outstanding borrowings had remained unchanged since November 9, 2015. Additionally, the company has been primarily operating within cash flow from operations since year-end. The company has a current cash position of $235 million compared to a cash position of $21 million at December 31, 2015. After the recent draw, the company remains in compliance with the incurrence covenants under the indentures related to its senior unsecured notes.