Abraxas Petroleum Corp., a petroleum exploration and production company, could be kicked off the Nasdaq stock market after it failed to file its annual report. But that’s not the only headache the San Antonio-based company is facing.
Most of its more than $200 million debt is coming due, and it has lost contracts that shielded it from turbulent gas prices.
According to a filing made Thursday with the U.S. Securities and Exchange Commission, Morgan Stanley Capital Group, a major creditor for Abraxas, terminated its hedge contracts with the company earlier in April after Abraxas defaulted on its loan.
A second creditor, Angelo Gordon Energy Services LLC, notified Abraxas last Friday that the company is in default of its separate, $127.9 million loan and is demanding immediate payment – plus accruing interest.
According to the filing, Angelo Gordon has said it is willing to refrain from any further actions if Morgan Stanley and other creditors agree to an extension on Abraxas’ first debt.
Abraxas said in its filing it is exploring possible solutions, including seeking extensions with lenders and trying to raise additional funds through asset sales and new debt. “However, we cannot provide any assurances that we will be successful in obtaining capital from such transactions on acceptable terms, or at all.”
The company also said it plans to terminate its remaining hedge contracts, which will allow it to avoid accruing additional debt. The hedge contracts allowed Abraxas to sell oil at a fixed price, shielding it against downward price movements and brought in $75 million in 2019.
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A voicemail left for an Abraxas representative was not returned by publication time Friday.
The company, which operated 571 oil wells around the U.S. as of the end of 2019, posted a $73.6 million loss in the third quarter last year on $12.5 million in revenue.
The same day Angelo Gordon sent its notice, Abraxas also received a letter from the Nasdaq exchange, which said that because the company had not filed its annual report for 2020, it was no longer in compliance with the exchange’s rules. The company has two months to submit a plan for gaining compliance, and if Nasdaq agrees, only then will the company have an extension to submit its annual report.
“Our employees and professional advisors remain dedicated to working diligently to complete all required information to file the [annual report] as soon as reasonably possible,” Abraxas said in the filing.
It’s not the first time the company has come close to being booted off the exchange. It received similar warnings after failing to post its 2019 annual report in time, and again after it failed to post its first-quarter results. On two separate occasions in 2019 and 2020, the company also received notices after its stock price fell below an average share price of $1. On Friday, Abraxas closed at $2.05 a share.
The pandemic hit the company hard. Last year Abraxas was one of a handful of oil and gas companies that took out more than $1 million in PPP loans, which it said it used to pay the wages of 25 employees. It laid off an unknown number of workers in March. The company also made salary cuts that it said reduced its general and administrative expenses by 40 percent. Six of the company’s 10 board members resigned shortly after.
But the company struggled before the pandemic as well. In 2019, it posted a $65 million loss despite pulling in $129 million in revenue.