Each one in plain English, with the numbers worked through for a shareholder.
26 June 2019auditor change● Neutral
On June 21, 2019 PetroQuest amended and restated a registration rights agreement first signed February 8, 2019 with certain holders of its new Class A Common Stock (par $0.01) and its 10% Senior Secured PIK Notes due 2024. Those holders, acting together, can require the company to file a shelf registration (within 75 business days of a request) so they can resell their shares, can ask for demand or underwritten offerings, and can ask the company to seek over-the-counter quotation of the Class A stock; the company generally pays registration costs. The filing is labelled as an auditor change but contains no auditor information, only the registration agreement. It shows the post-reorganization equity now exists (it was issued to former noteholders, consistent with the plan), and implies the company is still an SEC reporting company, but gives no figures on holdings.
On January 31, 2019 the bankruptcy court confirmed PetroQuest's Chapter 11 plan (the first amended plan, immaterially modified January 28), meeting the January 31 confirmation target. Existing common stock (25,587,441 shares at January 29, 2019) and Series B preferred (1,495,000 shares) will be cancelled on the effective date with no distribution or value to shareholders, while the $50 million term loan is repaid in cash from a new exit facility and the 2021 note and PIK note holders get 100% of the new equity (diluted by management incentive shares and the exit-facility backstop premium) plus $80 million of new PIK notes due 2024. The company is targeting an effective date on or before February 8, 2019 but gives no assurance, and technical plan amendments are possible.
On January 14, 2019 PetroQuest filed a modified Chapter 11 plan reflecting a settlement with the creditors committee and holders of the Hoog/Lee litigation claims, who agreed to support confirmation. General unsecured creditors would share $1.2 million in cash (up from $400,000), with claims of $7,500 or less paid 50% and the Hoog/Lee litigation holders' share capped at $400,000; the 2021 note holders get nothing on their deficiency claims. The filing does not address shareholders; the earlier plan terms for equity are not restated here and the plan is still unconfirmed.
On December 18, 2018 PetroQuest and the supporting creditors amended the Restructuring Support Agreement, pushing the confirmation order deadline from December 21, 2018 to January 31, 2019 and the plan effective date from December 31, 2018 to February 8, 2019. A revised plan filed December 20 keeps the same split of the new equity and $80 million of new PIK notes (now due 2024 rather than 2023) between the 2021 notes and PIK notes holders, and moves note deficiency claims into the general unsecured pool. The filing does not mention any change for existing shareholders; the earlier plan terms extinguishing the equity are not restated here.
On November 6, 2018 PetroQuest and certain subsidiaries filed Chapter 11 in the Southern District of Texas (Case No. 18-36322), with a Restructuring Support Agreement signed by holders of 81.83% of the 2021 notes, 84.76% of the 2021 PIK notes and supporting term loan lenders. Under the plan, existing common and preferred stock would be extinguished with no distribution to shareholders; the $50 million term loan would be paid in cash from an exit facility, and the 2021 note and PIK note holders ($9.427 million and $275.0 million of claims) would receive 100% of the new equity (subject to dilution from management incentive shares and a backstop premium) plus $80 million of new 10% PIK notes due 2023. This resolves the forbearance thread by choosing Chapter 11 over a private exchange, and the filing also accelerates the debt and includes a motion to restrict trading in the equity to preserve tax attributes. Plan milestones: solicitation by November 20 and confirmation order by December 21, 2018. This is a proposed plan, not yet confirmed.
PetroQuest bought another week from its creditors. Having skipped about $14.2 million of interest due on its two sets of 2021 second-lien notes in August, it extended forbearance with its term lenders and with holders of 77.9% of the notes and 70.7% of the PIK notes to 6 November, and said openly that Chapter 11 was among the options being weighed. The fourth such extension in six weeks - the negotiation, not the default, was now the story.
On October 19, 2018 the term loan lenders and the supporting 2021 notes and 2021 PIK notes holders signed third amendments extending their agreement not to act on the unpaid August interest from October 19 to October 31, 2018 (11:59 p.m. ET). The filing gives no new terms or progress on a restructuring; it is another short extension of the existing forbearance.
On October 5, 2018 PetroQuest and its term loan lenders (Wells Fargo as agent), plus the supporting 2021 notes holders (about 77.9%) and 2021 PIK notes holders (about 70.7%), extended their agreements not to act on the unpaid ~$14.2 million August interest, from October 5 to October 19, 2018 (11:59 p.m. ET). The company still says it is weighing private debt exchanges or Chapter 11, and reports about $25.4 million of cash on September 30, 2018 with no borrowing availability under the term loan. No resolution; another two-week delay continuing the thread.
On September 28, 2018 PetroQuest extended all three forbearance agreements (term loan lenders, 2021 notes holders, 2021 PIK notes holders) from September 28 to October 5, 2018. The $14.2 million August interest remains unpaid, and the company says it is still evaluating private debt exchanges or Chapter 11. No resolution yet, only another one-week delay.
Effective September 14, 2018, PetroQuest signed forbearance agreements with the term loan lenders and with holders of about 77.9% of the 2021 notes and 70.7% of the 2021 PIK notes. All agree not to act on the unpaid $14.2 million August interest until September 28, 2018. The company says it is weighing private debt exchanges or a Chapter 11 filing and is negotiating with these creditors, with Seaport Global and Porter Hedges as advisors. It says it continues to pay suppliers and fund operations. This extends the August 15 missed-payment thread and puts bankruptcy on the table for the first time.
On August 31, 2018 PetroQuest signed a new $50 million Multidraw Term Loan Agreement with Wells Fargo as agent, replacing the October 2016 loan, and borrowed the full $50 million at 10% interest, maturing October 17, 2020. It used $32.5 million to repay the previous loan and kept the balance, leaving no borrowing availability and about $25 million of cash. The loan has a first-priority lien on substantially all assets, a required reserves-value coverage ratio of 1.4x at September 30, 2018 and 1.5x from December 31, 2018, and still bars Series B preferred dividends. This was done during the forbearance on the missed note interest, and the filing says the company was in compliance with the covenants.
PetroQuest chose not to pay about $14.2 million of semi-annual interest due August 15, 2018 on its 2021 second lien notes and 2021 PIK notes, stating this was to preserve liquidity. The term loan agent (Wells Fargo) and lenders agreed to forbear, meaning not act on the resulting defaults, until the earlier of September 14, 2018 or a further default. This is the first missed interest payment in the company's history shown here, and it puts the PIK-notes structure from 2016 under strain.
On May 4, 2018 the NYSE suspended trading in PetroQuest stock and began delisting proceedings because the average market capitalization over 30 trading days was below $15 million. The shares began trading on the OTCQX market on May 7, 2018 under the symbol PQUE. The company can seek review by an NYSE committee and says it is considering what actions to take. This is the delisting threat flagged in the April notice and ends the long-running NYSE listing thread, although the formal delisting process may still continue.
On April 11, 2018 the NYSE told PetroQuest its stock fell below listing standards because the average closing price was under $1.00 over the 30 trading days ending April 9, 2018. The company has six months to get back above $1.00. Its market capitalization had also recently fallen below $15 million, and if the 30-trading-day average is under $15 million the NYSE will immediately suspend trading and start delisting. This is a worse price-based warning than the 2015 and June 2017 notices, which concerned price and market value or equity under $50 million.
On January 31, 2018 PetroQuest's subsidiary sold certain producing Gulf of Mexico oil and gas assets to Northstar Offshore Ventures LLC, effective December 1, 2017. It received no sale proceeds and must contribute $3.75 million to future abandonment costs, but it removes an approximate $35.4 million undiscounted abandonment liability and it expects a cash refund of about $10.3 million of bond collateral. If Northstar fails to post replacement bonds or security within a reasonable time, PetroQuest can rescind the sale. The filing also mentions 2017 reserves estimates in a news release, but the figures are not in the text provided.
20 Dec 2017asset acquisition disposition● NeutralMajor
In December 2017 PetroQuest agreed to buy leases on about 24,600 gross acres of Austin Chalk in central Louisiana from Navitas Oil & Gas for up to about $18.8 million cash plus 2,000,000 new shares, with a first test well planned for Q2 2018. It funded this with $8.75 million from selling East Texas water disposal assets and about $6 million of cash. It also agreed to swap $4.75 million of 2021 notes for 2,240,000 shares, subject to NYSE approval, and the term loan lenders consented to the purchase. This is a new oil play and adds dilution, but cuts some debt.
On June 12, 2017 the NYSE told PetroQuest it fell below listing standards because average market value over 30 trading days was under $50 million and equity was under $50 million. The company has 45 days to submit a business plan, and the stock keeps trading while the plan is accepted and monitored. This repeats the equity and market value warning first received in December 2015.
On April 17, 2017 PetroQuest filed a registration statement so holders can swap their unregistered 2021 second-lien notes ($14.177 million) and PIK notes (about $251.9 million, issued Sept 27, 2016 and Feb 15, 2017) for registered notes with substantially the same terms. The company receives no proceeds. This fulfils the registration rights from the September 2016 exchange and is not a new financing. The PIK notes issued on Feb 15, 2017 imply interest was paid in kind then (inference).
On Oct 17, 2016 PetroQuest signed a Multidraw Term Loan Agreement with Franklin Income Fund and Wells Fargo as agent, for up to $50 million at 10% interest, available to draw for three years and maturing Oct 17, 2020. It replaces the JPMorgan bank facility, whose borrowing base had been cut to $0; nothing is borrowed yet. It is secured by a first-priority lien and carries reserve-coverage covenants and a ban on Series B preferred dividends. This delivers the Franklin commitment from August, though the filing says three-year availability against the four-year term described earlier.
On Sept 27, 2016 PetroQuest closed its exchange offers: holders of $243.468 million of old 2017 and 2021 notes (about 86.9% of the total) tendered and received $243.468 million of new 10% Second Lien Senior Secured PIK Notes due Feb 15, 2021 plus 3,517,000 new common shares. This completes the August exchange thread; the shares dilute existing holders, and the new notes carry an option to pay part of the interest in kind for the first three interest dates. The filing states the new notes are second-lien, behind the bank facility. The text provided is cut off, so the effect on the remaining 2017 notes is not shown.
On Sept 13, 2016, after holders of the 2021 notes gave the required consents, PetroQuest signed a First Supplemental Indenture changing that indenture, which takes effect only when the exchange offers complete, and holders waived registration rights. Changes include allowing the new PIK notes to be increased or issued for PIK interest and letting bank-type loan proceeds be used to buy or redeem leftover 2017 notes. A Sept 14 press release gave early tender results, but the figures are not in the text provided. This advances the August exchange thread but does not show it completed.
On Sept 1, 2016 PetroQuest chose not to pay the interest due on its 2017 notes and entered the 30-day grace period, and JPMorgan agreed to forbear on the resulting bank defaults until the earlier of Oct 1, 2016 or a forbearance default. The company says that if the exchange offers fail it will consider alternatives including a Chapter 11 filing, and that even if they succeed it may seek bankruptcy protection without further liquidity improvement and debt restructuring. This is the first explicit mention of bankruptcy in the filings and raises the risk for shareholders.
On Aug 25, 2016 PetroQuest cut its bank borrowing base and commitments from $22.5 million to $0, with the lenders (other than JPMorgan, which stays as sole lender) leaving the facility, and approved up to $280.3 million of new second-lien PIK notes. It launched new exchange offers for the remaining 2017 notes ($135.6 million) and the 2021 notes ($144.7 million) into new 10% PIK notes plus up to 3,517,000 shares, with support agreements covering about 79% of the old notes. Franklin Income Fund also committed to a $50 million four-year first-lien term loan, conditional on at least 87% of the old notes exchanging and closing by Oct 21, 2016. This reverses the February deal's aim of a lasting fix and adds a new exchange and dilution.
On June 20, 2016 the Fourteenth Amendment to the bank credit agreement cut the borrowing base and lender commitments from $32 million to $22.5 million and suspended the financial covenants until the first borrowing or letter of credit. Borrowing is effectively blocked: the company expects to be able to use $0 for now, and later no more than $5 million, with excess cash above $10 million required to prepay. The company also filed a risk factor saying the limited access could constrain funding of development. No borrowings were outstanding at June 20, 2016. This further shrinks the bank facility (the $42 million level in January had already fallen to $32 million by this filing, a step not described here).
On April 20, 2016 PetroQuest's subsidiary sold the majority of its remaining Woodford Shale assets in the East Hoss field to GR Woodford Properties, LLC for about $18 million gross (before customary adjustments, effective April 1, 2016). The filing does not say how the proceeds will be used. This appears to be the Oklahoma asset sale the bank amendment had allowed by March 31, 2016, though the filing does not link them and the closing came after that date (inference).
18 Feb 2016capital raising announcement● NeutralMajor
On Feb 17, 2016 PetroQuest completed its exchange offer for the 10% 2017 notes: holders of $214.379 million (about 61% of the notes) tendered, and received about $53.6 million cash, $144.674 million of new 10% Second Lien Senior Secured Notes due Feb 15, 2021 and 4,287,580 new common shares. The offer had been for up to $300 million, so the result fell short of the maximum; the filing says the new notes are secured by second-priority liens behind the bank facility. Note the filing states the 2021 notes' principal as $214.379 million, while the issued amount is $144.674 million (the filing's own wording). This completes the exchange thread launched in January and dilutes existing shareholders with the new shares.
On February 1, 2016 PetroQuest signed a Fourth Supplemental Indenture removing most restrictive covenants and some default provisions on the 10% 2017 notes after enough holders consented; it only takes effect when the exchange offer completes. The exchange offer is for up to $300 million of those notes in return for up to $75 million cash, $202.5 million of new 10% Second Lien Senior Secured Notes due 2021 and 6,000,000 common shares; a Feb 3 press release gave early-tender results, but the figures are not in the text provided. U.S. Bank replaced Bank of New York Mellon as trustee. This is the first sign of the 2017 notes refinancing that the credit amendments anticipated.
On January 25, 2016 PetroQuest signed a Thirteenth Amendment to its bank credit agreement, cutting the borrowing base and commitments from $55 million to $42 million, with usage expected to be limited to about $10.5 million (25% of commitments) in the first quarter. It loosens the debt to EBITDAX limits (5.0x for March 2016, up to 5.75x later), replaces the current ratio test with a minimum EBITDAX to cash interest of 1.0x, allows up to $300 million of second-lien debt for the previously announced exchange of the 2017 notes, and permits a cash sale of most remaining Oklahoma assets by March 31, 2016 (borrowing base falls $10 million on that sale). It also bars preferred dividends on the 6.875% Series B preferred stock and removes the stock buyback allowance. No borrowings were outstanding at January 25, 2016.
