Shares of Rex Energy, Corp. (NASDAQ:REXX) Take a Dip After Company Fails to Renegotiate Senior Notes

Exploration and production company, Rex Energy, Corp. (NASDAQ:REXX), announces that it has failed to renegotiate senior notes.

Rex Energy (REXX) reported that restructuring talks with a current holder of its 1.0%/8.0% senior notes due 2020 have ended without any progress. Without the breathing room that this deal would have provided, it looks like the company has a narrow band of options left to manage its debt.

Rex had offered to exchange the senior notes for new notes, converted at par, that had a lower interest rate: 1% until October 2, 2017, then 3.5% until the bond matures in late 2019. When called, the notes would be paid in either cash or equity at Rex Energy’s discretion.

The company’s stock price has dropped $0.10 since Friday’s announcement, trading at $0.35 per share. (See also: Franklin Resources Buys 9% Rex Energy Stake).

While Rex recorded a 3Q profit of $5.4 million, that was mostly due to income from discontinued operations and tax benefits. Rex has been operating at a loss for a while, losing about $100 million since the start of the year and $264 million the first three quarters of 2015. While its total liabilities have fallen slightly since January 1st, assets have fallen faster, and now there’s only $75 million separating the two numbers.

With a balance sheet as bleak as Rex Energy’s, it’s not too surprising that the note holders did not want to take a lowered coupon rate in exchange for the possibility of equity, even if that equity was offered at $1.15 to the dollar.

Small exploration and production companies like Rex have been hurt the worst in the oil price downturn, so the offer of a stake in a venture that is nearly financially underwater was not attractive enough to offset the drop in interest rate.

Analysts have been warning that Rex was a bankruptcy risk for over a year, and it looks like that prediction may soon come true. The company has little else to leverage in order to give it breathing room. Expect significant asset sales or a prepackaged bankruptcy to start soon. (See also: Oil Companies Near Bankruptcy.)

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Rex Energy, Corp. (NASDAQ:REXX) shares are moving -19.760% on the news today and have traded in the range of $0.230 – 0.367 during the current trading session. A number of brokerage analysts have recently weighed in on the stock, providing price target projections. The covering firms currently have a consensus one-year price target of $0.940 on the stock.  This is according to brokerage analysts polled by Thomson Reuters First Call.  This is the average number from the individual targets provided by the firms.  Analysts are projecting earnings per share of $-0.080 for the next fiscal quarter.  For the current year, analysts are predicting earnings of $-0.610 per share according to First Call.

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In looking at where Rex Energy, Corp. (NASDAQ:REXX) is trading on a technical level, the stock is trading -44.172% away from its 50-day moving average of $0.503.  Based on the most recent available data, the equity is -88.436% off of its 52-week high of $2.430 and +22.174% away from its 52-week low which is $0.230.

Today, the stock opened at $0.350 and the last bid at the time of writing stood at $0.281.  During the session thus far, the equity dipped down to $0.230 and touched $0.367 as the high point.  Rex Energy, Corp. (NASDAQ:REXX) has a market cap of $26.94M and has seen an average daily volume of 1,408,330 over the past three months.

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Disclaimer: The views, opinions, and information expressed in this article are those of the authors and do not necessarily reflect the official policy or position of any company stakeholders, financial professionals, or analysts. Examples of analysis performed within this article are only examples. They should not be utilized to make stock portfolio or financial decisions as they are based only on limited and open source information. Assumptions made within the analysis are not reflective of the position of any analysts or financial professionals.

 

 

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