BDC Credit Reporter View
We noted that the Company's stock price had dropped to a new low shortly after reporting IIIQ 2018 results. We also read a useful Seeking Alpha article that indicated profitability is challenged and a wall of debt hits in 2020 even as EBITDA is eroded by lower production; high capex and lower prices. All ingredients sufficient to put Bellatrix back on the Watch List from which the Company had been removed after IIIQ 2018 debt valuations improved from a 30% discount to par. Thankfully, there is no immediate risk of default as the Company is operating well within its newly reset debt covenants, but our job is to look down the road to when the debt matures in 2023, but which has a built in catalyst point in 2020. All debt is held by FS Investment Group BDC entities, especially its energy-focused fund. The group just increased its exposure from $79mn to $104mn, and has a second lien on all the Company's assets.