Bonanza Creek Energy (BCEI +49.7%) explodes higher after Bill Barrett (BBG +0.3%) discloses it entered into a confidentiality agreement and indicated its interest in a "combination transaction" involving a reorganized BCEI.
BCEI filed for Chapter 11 bankruptcy protection earlier this month and said it expected to consummate its prepackaged restructuring plan and emerge from Chapter 11 before the end of Q1.
Both companies are focused on the development of oil and natural gas assets located in Colorado's DJ Basin.
BCEI says the plan will reduce its unsecured bond obligations by ~$867M and bolster its liquidity position through a $200M rights offering for new equity, to be backstopped by certain unsecured noteholders.
Existing shareholders will receive 4.5% of the reorganized equity as of the effective date of the prepackaged plan and three-year warrants to acquire up to 7.5% of equity in the reorganized company.
After a relief move up yesterday, Bonanza Creek Energy (NYSE:BCEI) -- which tumbled 58% Friday on news it would file for bankruptcy -- is off another 19% premarket today.
The Denver-based company said it planned to eliminate $850M in debt and provide $200M in new equity with a Chapter 11 restructuring. It expects to file by Jan. 5 and exit bankruptcy protection in the first quarter.
Bankruptcy filings for oil and gas producers more than doubled this year vs. last year.