Each one in plain English, with the numbers worked through for a shareholder.
1 Apr 2016bankruptcy or receivership▼ BadMajor
Filed for Chapter 11 in Oklahoma on 1 April 2016, explicitly for an orderly wind-down and sale of everything, with the Constellation holding company put into Chapter 7 liquidation. All five directors resigned on the appointment of a trustee, and the company told shareholders outright that they would lose their entire investment. Unlike the leverage-driven failures of the previous decade, this one the company blamed on the collapse in oil prices and persistently low gas prices, and the record supports it: three borrowing-base cuts in eleven months took the facility from $176 million to $39 million while the debt stayed put. Ends the corporate line that ran from Quest Resource through the 2010 recombination.
Closed the Jericho Buckmanville sale for $12.9 million and paid it to the lenders. The last completed transaction before the company filed for bankruptcy three months later.
Agreed to sell Oklahoma assets to Jericho Buckmanville Oil for $13 million, all of it going to the banks, as the first outcome of the strategic review Evercore had been running since early 2015. Against a $37 million borrowing-base shortfall it was never going to be enough.
The November redetermination halved the borrowing base again, from $76 million to $39 million, against $76.2 million drawn: a $37.2 million shortfall the company had thirty days to explain how it would cover. The lenders named the causes plainly as falling oil and gas prices, expiring hedges and depletion. This is the moment the crash becomes terminal.
Nasdaq confirmed the delisting after the company declined both to file a compliance plan and to withdraw voluntarily, with trading suspended from 9 September 2015. A third deficiency, on free-float market value below $5 million, arrived in the same week. PSTR moved to the pink sheets with no guarantee a market maker would quote it.
Nasdaq said equity had fallen below the $10 million minimum, and the company replied that it would not even file a plan to fix it and expected to be delisted to the over-the-counter market. Giving up the listing without a fight, three months before the final borrowing-base cut.
The May borrowing-base redetermination cut the facility to $76 million and left a $10.38 million shortfall to be cleared by December, with no ability to redraw anything repaid. The first crash-driven cut of the cycle, and the company was now selling assets and hedges simply to stay inside its own credit limit.
Voided five years of accounts, from the September 2010 quarter through September 2014, because White Deer's preferred stock had been shown as temporary equity when it should always have been a liability. The error flowed from the same cashless-exercise feature that let the warrants and preferred interact, and it turns years of reported results more negative, though it does not change equity, per-share figures or cash. A second restatement for a company whose predecessor had already restated 2005 to 2008.
Opened a fresh at-the-market share programme through MLV as oil prices collapsed, at 3% commission. Selling stock into a falling market at around a dollar was the only external funding still open to it.
A second Nasdaq notice within a month: the market value of shares not held by insiders had fallen below $15 million. With White Deer holding most of the stock, the free float was too small to meet the exchange's minimum regardless of what the business did.
Changed auditors for a purely mechanical reason: UHY's Texas practice was bought by BDO USA, so UHY resigned and BDO took over. No disagreements and no qualified opinions. Worth noting only because UHY had been the auditor brought in during the Quest distress of late 2008.
Nasdaq warned that the shares had traded under $1 for thirty straight days, giving until May 2015 to recover. The company had already called a shareholder meeting to approve a ten-for-one reverse split, an admission that the price would not recover on its own.
10 Oct 2014capital raising announcement● NeutralMajor
Swapped $35.0 million of White Deer's redeemable preferred, due for cash redemption in 2018, for 32.1 million new shares at $1.09. It removed a hard cash obligation from a company that could not have met it, at the cost of handing the fund 43.1 million shares outright; $5,075 of preferred still remained.
What it means for a shareholder
32.1m new shares at US$1.09 to raise about US$35.0m. That's 51% dilution: every existing holder's slice gets 51% smaller. If you held US$1,000 of shares (917 at the issue price), your slice goes from 0.00296% to 0.00145% of the company. To keep it you'd need 951 more shares - about US$1,037 at the issue price.
Settled the Delaware lawsuit it had brought over its Constellation Energy Partners stake, agreeing a $21.6 million target recovery: it sold its Class A units to Sanchez Energy Partners immediately for $7.3 million and would sell the remaining 5.5 million Class B units through the year, with Sanchez covering up to $5 million of any shortfall. An orderly exit from a three-year, roughly $24 million attempt to control a partnership it never got control of.
Bought back the accumulated dividend warrants: White Deer gave up warrants over 22.2 million shares, struck at an average $3.23 and far out of the money with the stock at $1.31, for 1.1 million shares. It cut the fund's fully diluted stake from about 69% to 57% and its voting power from 64% to 51%, the first reduction since 2010, though it stayed in control.
18 Oct 2013asset acquisition disposition● NeutralMajor
Agreed to buy about 22,000 net acres of producing oil leasehold in central Oklahoma from West Star and Shalco for $10 million, mostly paid in 4.5 million of its own shares. Its first real acquisition of oil rather than gas assets, and it was buying with paper because it had no cash to spare.
The third quarterly preferred dividend of the year paid in warrants again, over about 1.8 million shares. Four quarters of this, and the fund's fully diluted stake was approaching 70%.
Another quarterly preferred dividend paid to White Deer in warrants rather than cash, over about 1.6 million shares. The exercise prices track the falling share price down, so the same coupon buys more shares each time.
Announced its 2013 capital budget and paid the year-end preferred dividend in kind again, this time across three separate White Deer investments, issuing warrants over 1.7 million shares. The fund had put in more money during 2012 than the single February placement suggests, and every dividend date compounded its position.
Paid the October preferred dividend to White Deer in warrants and voting preferred rather than cash, as it had done in December. Each quarter's unpaid coupon buys the fund more of the company.
3 Oct 2012asset acquisition disposition● NeutralMajor
Sold the KPC pipeline, its entire midstream segment and 1,120 miles of interstate gas line, to MV Pipelines for $53.5 million cash plus up to $4 million of earn-outs, with the proceeds going straight to the banks. This is the sale the June credit amendment had demanded; it cut the borrowing base to $120 million and left about $15.7 million of headroom. The pipeline half of the 2010 merger was now gone.
The lenders cut the borrowing base again, to $176 million against $166.5 million drawn, and tightened the screws: a 1.5% penalty rate on borrowings above a $120 million target, a $1 million monthly reduction in the base, and new liens on the KPC interstate pipeline and the Constellation units. The company had $0.3 million of cash. If it could not sign a sale agreement for the pipeline by a set date, White Deer was contractually on the hook for another $7.5 million of equity to pay the banks down.
15 Feb 2012capital raising announcement● NeutralMajor
White Deer put in a further $7.5 million for 2.2 million shares at $3.44, and the filing also records that the December preferred dividend was paid not in cash but in more warrants and voting preferred stock. Its 12% coupon was compounding into ever more of the company rather than leaving the building as cash, which is the mechanism by which its ownership climbs towards 70%.
What it means for a shareholder
2.2m new shares at US$3.44 to raise about US$7.5m. That's 18% dilution: every existing holder's slice gets 18% smaller. If you held US$1,000 of shares (291 at the issue price), your slice goes from 0.00293% to 0.0024% of the company. To keep it you'd need 64 more shares - about US$220 at the issue price.
Spent another $6.0 million cash buying 2.79 million more Constellation Energy Partners units, lifting its stake to 26.4% of the votes. Having failed to buy control outright in August, it was accumulating towards it instead, in a partnership it did not operate, while its own credit facility was under pressure.
Opened an at-the-market programme with broker McNicoll, Lewis & Vlak to sell shares gradually into the Nasdaq market at 3% commission. Routine plumbing, but it marks the point where common shareholders start absorbing steady dilution alongside White Deer's preferred dividends.
12 Aug 2011asset acquisition disposition▼ BadMajor
The June deal collapsed on a legal technicality and was replaced with a smaller one. Constellation Energy Partners' own board said Delaware takeover law barred it from even discussing approval while the agreement stood, so the parties tore it up and PostRock instead bought the management company holding 14.9% of the votes for $6.6 million cash and a million shares. Less than half the original stake, and no termination fees paid.
23 June 2011asset acquisition disposition● NeutralMajor
Agreed to buy Constellation Energy's entire stake in Constellation Energy Partners, a listed gas partnership, for $11.25 million cash plus $11.25 million in stock and warrants. The attraction was control: the package included every Class A, C and D interest, which carried the management rights, alongside 24.5% of the ordinary units.
21 Jan 2011asset acquisition disposition● NeutralMajor
Completed the Magnum Hunter sale for $39.6 million after adjustments, and $12.1 million of the cash plus 3.0 million of the Magnum Hunter shares went straight to Royal Bank of Canada to release its liens, cutting that term loan to $13.3 million. The asset sale was in substance a debt repayment; the company kept very little of the proceeds.
Agreed to sell its West Virginia oil and gas properties to Magnum Hunter's Triad Hunter subsidiary for $39.75 million, half cash and half in 3.2 million Magnum Hunter shares, in two closings. Retreating from the Appalachian assets the Quest group had bought in 2008 to concentrate on the Cherokee Basin gas business.
