Today, July 13, 2016, the New York Stock Exchange immediately suspended trading of Atlas Resource Partners (ARP) stock. The company’s stock will be shifted over to OTC Markets and will be assigned the ticker ARPJ. The independent developer and producer of natural gas and crude oil has been hit hard by down turning oil price. Over the past year, the company’s stock has sunk from $5 highs to 30 cent lows. During the last three-year, the company’s operating loss has increased consecutively.
For 2015, the company experienced an operating loss of over seven hundred thousand dollars, with a net income applicable to common shares exceeding -800,000. On July the 11th, the company filed an 8-K filing and announced their intention not to make their first installment payment, which was due on the same day. To rectify the problem for the short-term, the company entered into 2 forbearance agreements. Under the agreement, the lenders will refrain from exercising their rights to collect payment, until July 27, 2016.
The Delaware limited partnership disclosed on June the 8th of 2016 that they had $673.7 million outstanding, which equates to a borrowing base deficiency of $143.7 million. The partnership has two means of rectification. They can opt to repay amount outstanding and sufficiently cure the borrowing base deficit or they can put up oil and gas properties as collateral. As of July the 11th, the partnership maintains $32 million on hand.
As pointed our by Citi’s Faisel Khan just last week, ARP is “running out of options”. Whether or not Atlas Resource Partners will be able to survive remains to be seen, but the company has very little time remaining and will need to act quickly to avoid repercussions.