Bonanza Creek Energy (BCEI) Stock: Takes A Dive On Poor Q2 Results

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Bonanza Creek Energy Inc (NYSE: BCEI)

Bonanza Creek Energy is having an incredibly hard day in the market today, and for good reason. The company reported its results for the second quarter. Unfortunately, the results were overwhelmingly negative. Today, we’ll talk about what we saw from the Q2 financial results, how the stock reacted to the news, and what we can expect to see from BCEI moving forward. So, let’s get right to it…

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BCEI Reports Disappointing Q2 Results

As mentioned above, Bonanza Creek Energy reported its financial results for the second quarter before the market open this morning. Unfortunately, the results were overwhelmingly negative. Here’s what we saw from the quarter:

  • Earnings – When it comes to earnings, BCEI definitely disappointed investors. During the quarter, analysts expected that the company would report a loss of $0.28 per share. However, the company actually reported a loss of $0.40 per share, $0.12 worse than analysts expected to see.
  • Volumes – There was a positive side to the report. During the second quarter, production volumes were expected that average at 23.0 MBOE per day. However, production volumes averaged at 23.2 MBOE per day, showing a slight beat for BCEI.
  • Asset Sale Suspension – Bonanza Creek Energy also said that, as a result of the quarter, the company will be suspending the sale of its assets. Instead, it will be focusing on other liquidity enhancing and debt reduction measures.

How The Stock Reacted To The News

As you can see from the information offered above, the results for the second quarter didn’t go well. Unfortunately, this is leading to big declines for BCEI today. Currently, the stock is trading at $0.68 per share after a loss of $0.12 per share (15.14%) thus far today.

What We Can Expect To See Moving Forward

Moving forward, I have an overwhelmingly bearish opinion of what we can expect to see from BCEI. There are multiple reasons for this. First and foremost, the company operates in the energy sector. As an oil producer, Bonanza Creek Energy is heavily dependent on market spot prices of oil. When these prices go up, the company makes a larger profit selling its products. Adversely, when the oil spot price goes down, the company sees declines. Unfortunately, it doesn’t look like oil is going to recover any time soon. So, we’re likely to see more headwinds and upsetting earnings reports ahead.

Another reason that I maintain such a bearish opinion on BCEI is the company’s overall financial picture. At this point, the company is continuing to produce losses, which will require it to borrow more money. This is creating a massive liquidity problem, no matter how you slice it. Combine that with the fact that at current spot prices profit is far away, and we have a perfect storm for horrible market performance.

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What Do You Think?

Where do you think BCEI is headed moving forward and why? Join the discussion at TalkTRENDZ!

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