Back in February, energy market watcher Platt's provided a rather scary preview of oil patch havoc to come. The focus of the article was on the likelihood of banks cutting energy companies' credit lines on the order of 20% to 30%. In several cases, that cautionary figure is now proving conservative.
I've already talked about a few firms singing the borrowin' base blues. As more April redeterminations roll in, the severity of the shrinkage is really starting to set in.
Perhaps you noticed that McMoRan Exploration
Another stock getting whacked today is Quicksilver Resources
Other borrowing base redeterminations to watch out for over the next few weeks are those at Stone Energy
Leveraging up to buy that East Texas acreage around the market peak is really not looking so hot in the rearview mirror. The saving grace there, I suppose, is a puny capital expenditures program combined with very substantial oil hedges. Still, Berry's mostly just buying time, and that's not an enviable situation to be in.