PostRock to partially pay down revolver with borrowing base deficiency

By Angela McDaniels

Tacoma, Wash., Nov. 20 – PostRock Energy Corp. will use the proceeds of an asset sale to pay down debt under its revolving credit facility, according to an 8-K filing with the Securities and Exchange Commission.

As reported on Tuesday, the borrowing base on the credit facility was reduced to $39 million as of Nov. 1 from $76 million. The company had $76.18 million, including issued but undrawn letters of credit, of the credit facility used as of Nov. 12, resulting in a borrowing base deficiency of $37.18 million.

PostRock is in discussions with its lenders about alternatives if a default occurs but gave no assurances that an agreement can be reached on acceptable terms.

On Wednesday, the company agreed to sell some of its Oklahoma assets to Jericho Buckmanville Oil LLC for $13 million.

The sale is scheduled to close no later than Dec. 30. Either party can terminate the agreement if the sale has not closed by Jan. 31.

The asset sale is a result of the board’s evaluation of strategic alternatives that include, among other things, merging or selling PostRock and/or selling operating assets.

PostRock is an oil and natural gas company based in Oklahoma City.

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