Breitburn Energy Partners LP (OTCMKTS:BBEPQ) Racing Up The Charts

Shares of Breitburn Energy Partners LP (OTCMKTS:BBEPQ) have caught a bid again. This comes as other bankrupt names Ultra Petroleum Corp (OTCMKTS:UPLMQ) and Peabody Energy Corp (OTCMKTS:BTUUQ) have raced up the charts. Investors are now asking if this bounce is for real or only temporary?Breitburn Energy Partners LP is an independent oil and gas master limited partnership focused on the acquisition, development, and production of oil and gas properties throughout the United States. Breitburn’s producing and non-producing crude oil and natural gas reserves are located in Ark-La-Tex; the Midwest; the Permian Basin; the Mid-Continent; the Rockies; the Southeast; and California.Breitburn Energy Partners LP and some of its units filed for restructuring under Chapter 11 of the U.S. bankruptcy code in May. The oil and gas master limited partnership said it secured a $75 million debtor-in-possession financing, in addition to cash from its operations and cash on hand, to fund its operations during the bankruptcy process. The company listed assets in the range of $1 billion to $10 billion, and liabilities of $1 billion to $10 billion.Under chapter 11, secured note holders come first (bank lien), then unsecured note holders, preferred shareholders and lastly common shareholders. Breitburn said at the time:

During the last 30 days, Breitburn has been engaged in constructive discussions with its second lien noteholders and the advisors to its unsecured noteholders regarding the need for, sponsorship of, and terms of a balance sheet restructuring. Simultaneously, Breitburn has been engaged in constructive discussions with its revolving lenders regarding their support for emergence financing, as well as the treatment of Breitburn’s valuable hedging assets in conjunction with its emergence from the Chapter 11 Cases. Breitburn plans to utilize the Chapter 11 Cases to continue and complete these discussions with key stakeholders and evaluate other value-maximizing opportunities to facilitate an expedited balance sheet restructuring that will leave Breitburn as a stronger, deleveraged, and recapitalized enterprise.

Like other leveraged E&P companies, Breitburn borrowed too much and couldn't cover its debts in the oil price crash. Now the company is restructuring hoping that oil price have bottomed and that a new, leaner Breitburn can capitalize. The key here is who benefits?It appears it will unlikely be common shareholders. CEO Hal Washburn looks to have bailed and sold all of his common shares at the end of May. This is not a good sign and leads us to believe that he's getting out while he can and get some value for his holdings. It also leads us to believe that he is now working for creditors and not shareholders. Since no equity committee was formed, Hal only has to deal with secured creditors with the hope that they'll keep him on board when the company exits bankruptcy. This is the problem with the energy boom and bust. CEOs borrowed to the hilt all the while collecting millions in salary and then leave common shareholders in the lurch when the dust settled. It's terrible, but unfortunately it's how Wall Street and big business work these days. The little guy always gets the shaft in the end.The hope that common shareholders have is that Breitburn's Permian assets are worth quite a bit of money still. This is one of the reason that shares of Breitburn are rising lately. Add in oil touching $50 a barrel and other bankrupt players running and you get a perfect storm of momentum players looking for the next runner.Currently trading with a market cap of $22 million, BBEPQ is a great trader, but no longer a great investment. We can see shares continuing to climb on irrational exuberance, but all signs are pointing to common shareholders getting left holding the bag. Take your cues from CEO Hal Washburn, he sold all of his stock last month. In the end, most likely shareholders will be wiped out, which is unfortunate. We will be updating Insider Financial as soon as we know more. For continuing coverage on BBEPQ, sign up for our free newsletter today and get a free ebook as an added bonus!Disclosure: We have no position in BBEPQ and have not been compensated for this article.