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Vanguard plans to pay down revolver debt with proceeds of asset sale
By Wendy Van Sickle
Columbus, Ohio, May 2 – Vanguard Natural Resources, LLC plans to pay down its revolving credit facility with proceeds from a planned asset sale, according to a press release.
The company entered into a definitive agreement to sell its natural gas, oil and natural gas liquids assets in the Scoop/Stack area in Oklahoma to entities managed by Titanium Exploration Partners, LLC for $280 million on March 29. The company said it expects that transaction to close on or before May 18.
As of April 29, Vanguard had debt under its reserve-based credit facility totaling $1.69 billion with a borrowing base of $1.78 billion, leaving about $113 million of available liquidity after consideration of a $4.5 million reduction in availability for letters of credit and a $25 million increase for available cash.
The company is in the midst of its semiannual borrowing base redetermination.
Despite the anticipated paydown from the asset sale, “based on market conditions, continued declines in oil and natural gas prices and recent conversations with our administrative agent, we expect that our borrowing base will be redetermined to a level below our outstanding borrowings in our May 2016 redetermination, causing a small deficiency,” the company said.
Internal forecasts indicate Vanguard will “generate a substantial amount of excess cash flow over the course of 2016,” the company said, which it expects will be sufficient to repay the projected borrowing base deficiency.
In the case of a borrowing base deficiency, the credit facility requires Vanguard to repay the deficiency in equal monthly installments over a six-month period.
Vanguard is a Houston-based oil and gas exploration and development company.
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