Ohio pure-play Eclipse Resources Corp. said it has received a delisting notice from the New York Stock Exchange (NYSE) because the price of its common stock has fallen below the continued listing standard.
Dozens of oil and natural gas producers have received similar notices over the past year. NYSE requires that the average closing price of a listed company's common stock be no less than $1/share over a consecutive 30 trading-day period. Eclipse said that as of Feb. 26 the average of its closing price was 93 cents/share.
Eclipse now has a period of six months from the date of the notice to bring its share price and the 30-day average back above $1. The company's stock would continue to be traded on the exchange during that time.
"We do not believe that Eclipse Resources' current stock price, which is almost 80% insider held, is indicative of the value of our company," CEO Benjamin Hulburt said. "Eclipse Resources ended 2015 with liquidity of $281 million, which includes $184 million in cash, remaining well positioned to fund its operations."
In addition to cash on hand, the company has nothing drawn on its $125 million revolving credit facility. But it has $28 million in letters of credit outstanding, leaving it with an effective borrowing base of just $97 million. The company has offered a sobering outlook in recent weeks as it manages through the commodities downturn. The small-cap producer operates in just five Eastern Ohio counties. Financial analysts have noted that the company's limited liquidity and unfavorable strip prices for natural gas that threaten its already thin cash margins could build financial stress as the year progresses.
Eclipse doesn't report full-year financial and operational results until Thursday. But it said in early January that it expects to have produced 236 MMcfe/d in the fourth quarter. Given low natural prices, the company said it would voluntarily curtail its operated production to keep volumes in line with last year's average production of roughly 200 MMcfe/d (see Shale Daily, Jan. 5).
It also has idled its drilling program, deferred completions on 21 Utica Shale wells, written down the value of its proved reserves by 58% to just $212.9 million and said it expects to record a $750-850 million impairment charge on some of its oil and gas properties in the fourth quarter (see Shale Daily, Jan. 25). The company has yet to announce a capital budget for 2016, but management has noted that it has more than enough liquidity to fund what it has planned. The company has said its ultimate objective would be to finish 2016 with a cash balance and no new debt.
Eclipse said it plans to notify NYSE that it intends to "cure the price deficiency" of its stock price "to the extent it becomes necessary." The company announced the delisting last Friday and its stock was trading just under $1/share on Monday.