PostRock Energy Corporation revealed on Tuesday that its lenders have called the company’s debt due immediately.
“PostRock believes that the aggregate proceeds from any such transaction will be substantially less than the amount required to repay in full its indebtedness and that its stockholders will lose their entire investment,” the company said in its statement.
The Oklahoma City oil and natural gas company’s latest financial woes are traced back to a 2012 Third Amended and Restated Credit Agreement.
Last November, PostRock’s banking syndicate reduced the credit facility’s borrowing base from $76 million to $39 million, leaving the company overdrawn by more than $37 million after their credit limit was slashed nearly in half. The reduction in the borrowing base was due to the decline in oil and natural gas prices, the roll-off of hedges and the production of reserves since last May.
PostRock recently announced that it was unable to reduce the outstanding amount to the $39 million borrowing base. This was followed by the company’s disclosure that it did not make the quarterly interest payment due in February.
PostRock has been jolted with economic misfortune over the past few years. In early 2015, the company laid off more than 20 percent of its staff and cut its office staff by another 50 percent later in October.
In September, PostRock shares were removed from the Nasdaq Stock Exchange because the company’s market value was too low. The company warned investors about the value of its shares during the fourth quarter of 2015.
PostRock shares fell 9.5 cents, or 38 percent, Tuesday to 15.58 cents a share on the over-the-counter exchange.
PostRock remains engaged in the acquisition, exploration, development, production and gathering of crude oil and natural gas. Its primary production activity is focused in the Cherokee Basin, a 15-county region in southeastern Kansas and northeastern Oklahoma. PostRock owns and operates over 2,500 wells and nearly 2,200 miles of gas gathering lines in the Basin. It also owns and operates minor oil and gas producing properties in the Appalachian Basin.
