Goodrich Petroleum Corp (OTCMKTS:GDPM) has hit the OTC markets with a flurry of volume and price movement. The company ended up on the OTC markets after the NYSE delisted Goodrich due to “abnormally low” trading price levels and failing to meet the exchange’s minimum $1 bid requirement. The Company said in a statement that they will not appeal the delisting.Like Sandridge Energy (OTCMKTS:SDOC), GDPM got relegated to the bulletin board due to the precipitous drop in the price of oil. The carnage has spread throughout the oil patch and many small E&P companies have been hurt along the way. For those that trade the OTC markets, the question is whether GDPM will be able to find new life on the OTC markets or will the company end up in bankruptcy court. For holders that have ridden the stock down to these levels, we hope that isn't the case.GDPM is an independent oil and natural gas company, engages in the exploration, development, and production of oil and natural gas. The company holds interest in the Tuscaloosa Marine Shale located in southwest Mississippi and southeast Louisiana; and the Haynesville Shale Trend in Northwest Louisiana and East Texas. It owns working interests in 260 producing oil and natural gas wells located in 43 fields in 8 states. Goodrich Petroleum Corporation was founded in 1995 and is based in Houston, Texas.The focus for GDPM is managing its capital structure to preserve as much capital as possible. Last month the company suspended dividends on several series of preferred stock. The dividend suspensions applied to GDPM's 5.375% Series B cumulative convertible preferred stock, its 10% Series C cumulative preferred stock, and its 9.75% Series D cumulative preferred stock.
To Find Out The Inside Scoop On GDPM
Subscriber To Insider Financial
Over the past few months, Goodrich has been trying to weather the oil downturn. In August, the company was aggressively cutting its costs in the field and in its corporate offices, and sold much of its Eagle Ford Shale acreage in Texas for $118M to an unnamed buyer to keep itself afloat financially and pay off existing debt.The problem for Goodrich and other small E&Ps is that they never forecasted oil to fall below $30. Goodrich is able to make some money at $55 a barrel, but really needs at least $60 a barrel to cover everything. Q3 oil production averaged 4K-4.3K bbl/day, with full-year output lower by 15%-20% from previous guidance of 4.8K-5.2K bbl/day; Q3 natural gas production averaged 20.5-22.5 Mcf/day, with full-year output lower by 10%-15% vs. prior guidance.Goodrich has approximately $435 million in debt and $32 million in annual interest costs. Cash expenses are roughly $126 million per year. The main drivers of the cash expenses are interest and maintenance capital expenditures, which account for 65% of total cash expenses. While Goodrich has done a lot of work to reduce its debt, it still has a high level of cash interest per BOE of production due to its lower production after the Eagle Ford sale.In terms of its production, as Goodrich focuses on the Tuscaloosa Marine shale region, its production mix will shift towards oil more. Thus, Goodrich's production may end up being over 70% oil in a few years. We think this is a smart move because oil prices will most likely recover faster than natural gas prices.
We Have A Monster Pick Coming Soon!
Don't Miss Out!
Sign Up Below!
Currently trading at just a $4.8 million market cap, Goodrich Petroleum has fallen a long way over the past few years. At current levels, it's a lotto ticket depending on the price of crude and management's efforts to avoid bankruptcy. In a bankruptcy filing, common stockholders would most likely be wiped out. GDPM is a fast moving situation. We'll be updating Insider Financial as soon as we know more. Be sure to sign up in order to get the latest on GDPM.
Disclosure: We have no position in GDPM either long or short. We have not been compensated for this article.
Discover Hidden Gems
Don't miss the next big opportunity. Subscribe for timely alerts on potential market movers.
