Yuma Energy warns of senior credit facility covenant non-compliance

By Caroline Salls

Pittsburgh, Nov. 16 – Yuma Energy, Inc. does not expect to be in compliance with the trailing-four-quarter debt-to-EBITDA financial ratio covenant under its senior credit facility as of Sept. 30, and the company is working on several strategic alternatives to remedy the compliance issue and provide working capital to develop existing assets, according to a 10-Q filed Monday with the Securities and Exchange Commission.

Yuma said it does not expect to be in compliance with the covenant as a result of operating losses sustained during recent quarters stemming from a prolonged weak commodity price environment.

The company said it classified its bank debt as a current liability in its financial statements and is in discussions with its lenders who are still in the process of their borrowing base review.

According to the 10-Q, the alternatives being explored include refinancing Yuma’s debt, a sale of equity and possible joint ventures or mergers.

The company said its short-term liquidity is constrained and could severely impact cash flow and the development of its properties.

Currently, Yuma said its principal sources of liquidity are cash flow from operations and borrowing under the credit facility. During the first nine months of 2015, the company borrowed $6.8 million under the credit facility to fund a portion of its capital expenditures.

Yuma said its non-conforming borrowing base, which was $1.5 million, expired on Oct. 1 under the terms of an eighth amendment to the credit agreement, meaning its total borrowing base was $33.5 million as of Oct. 1 with $3.8 million of remaining availability.

The company is currently undergoing its October borrowing base redetermination, which could reduce the existing credit facility borrowing base and result in liquidity being severely limited and expenditures being limited to current cash flow, the 10-Q said.

Yuma Energy is an oil and gas company based in Houston.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.