Bonanza Creek Energy Inc (NYSE: BCEI)
Bonanza Creek Energy was hit with some pretty rough news recently. In late August, the stock’s price fell below listing requirements. However, after recent strong growth, this may not be such an issue any more. Today, we’ll talk about the news from the New York Stock Exchange, whether or not this is still an issue, what we’re seeing from the stock today, and what we can expect to see from BCEI ahead.
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BCEI Gets Bad News From The NYSE
Bonanza Creek Energy is listed on the New York Stock Exchange, so it’s incredibly important that the company complies with the rules of the exchange. One of the key rules of the New York Stock Exchange is that listed stocks maintain an average minimum closing price of at least $1 per share in any rolling 30-day period.
Unfortunately, BCEI fell below this mark. On August 22nd, the NYSE said that the stock’s 30-day closing average came in at only $0.98 per share. As a result, the NYSE notified the company that its price had fallen too low. Now, the company is in the midst of a 6-month grace period in which it has time to regain compliance.
With Recent Gains, Is Compliance Still An Issue?
At the moment, BCEI is trading at well over the $1 minimum per share price requirement. With strong recent gains, many are starting to ask whether or not regaining listing compliance is going to be an issue at all. This is an understandable question, and while things are looking better for the stock, it is not out of the woods just yet.
Moving forward, Bonanza Creek Energy needs to figure out a way to get out of the danger zone and make sure that its stock doesn’t fall below that crucial $1 per share mark again. Unfortunately, the company seems to have no plans – at least not that they’re willing to talk about – to maintain long-term compliance.
Another factor to consider here is the industry within which BCEI works. The company is focused on the production of oil and natural gas in the United States. While this was a great industry a few years ago, today, things are incredibly concerning. As we see the continuation of an oil supply glut that started well over a year ago, oil companies are grasping at straws trying to figure out the best way to survive the volatility. Unfortunately, this doesn’t seem like it’s going to change any time soon. If any negative news with regard to the industry as a whole is released, it could lead to drastic declines in the value of the stock, meaning that delisting is still an issue. However, it is worth mentioning that while BCEI doesn’t seem to have a plan just yet, there are options, and there is still plenty of time.
What We’re Seeing From The Stock Today
As mentioned above, Bonanza Creek Energy has been in the midst of an incredible increase in value. The gains we’ve seen on the stock recently are continuing today. Currently (12:36), the stock is trading at $1.23 per share after a gain of $0.09 per share (7.89%) thus far today.
What We Can Expect To See Moving Forward
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Moving forward, I have a relatively mixed opinion of what we can expect to see from BCEI. I will say, if you decide to get involved in this run, make sure that you are willing to take on the risks. At the end of the day, there’s quite a bit to be worried about here. The company has liabilities that total more than $1 billion, and it hasn’t earned a single penny of profit in quite some time. While it is trading well above $1 per share now, any negative news in the energy sector could drag it below this key point. All in all, there’s just too much to be concerned about!
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