Vanguard Natural Resources, LLC (OTCMKTS:VNRSQ) has seen its market cap fall and fall over the years since the crash. VNRSQ used to have a over a billion market cap, but now it is sitting at $22.65M. The company’s debt is ponderous, but some relief was granted last week and the market is reacting.
VNRSQ announced a settlement with its Ad Hoc Equity committee and created a modified plan, which I will detail below. The company filed for bankruptcy protection a while back and entered into a restructuring agreement. In the past, the company has seen production stay high but profits remain shallow because of debt. This news might help ease the slope on that trajectory, but in my opinion it will not change what is coming.
Vanguard Natural Resources, LLC (OTCMKTS:VNRSQ) is a publicly traded limited liability company focused on the acquisition, production and development of oil and natural gas properties.
Vanguard’s assets consist primarily of producing and non-producing oil and natural gas reserves located in the Green River Basin in Wyoming, the Permian Basin in West Texas and New Mexico, the Gulf Coast Basin in Texas, Louisiana, Mississippi and Alabama, the Anadarko Basin in Oklahoma and North Texas, the Piceance Basin in Colorado, the Big Horn Basin in Wyoming and Montana, the Arkoma Basin in Arkansas and Oklahoma, the Williston Basin in North Dakota and Montana, the Wind River Basin in Wyoming, and the Powder River Basin in Wyoming.
Here is a breakdown of the news from last week:
- The Modified Plan extends the expiration deadline for new warrants from three years to three and a half years for both preferred and common units of the Company.
- Holders of the Company’s common units will receive distributions of new warrants regardless of whether two-thirds of the common units vote as a class to accept the Company’s Modified Plan.
- The definition of “Exculpated Parties” will be amended to add the Ad Hoc Equity Committee.
- The Modified Plan provides for the payment of up to $350,000 of reasonable and documented fees and expenses of the advisors to the Ad Hoc Equity Committee in addition to those previously agreed upon. No further fees and expenses of such advisors will be allowed or payable.
VNRSQ is trading upward of 100% today based on this news. The energy sector overall is hurting and they are no different, especially as one of the first and largest oil companies to declare bankruptcy. Many analysts are predicting that with the hedges leaving the company’s earnings soon, VNRSQ will struggle to stay afloat.
Vanguard Natural Resources, LLC (OTCMKTS:VNRSQ) the market is rallying here on some news and maybe this insiders with some ray of hope. But, VNRSQ looks like its path towards bankruptcy is a winding one, but one that will reach its endpoint soon. The oil sector is in trouble and without a rapid turnaround VNRSQ will probably not be around much longer. For continuing coverage on shares of $VNRSQ stock, as well as our other breakout stock picks, sign up for our free newsletter today and get our next hot stock pick!
Disclosure: we hold no position in $VNRSQ, either long or short, and we have not been compensated for this article.