On August 7, 2019 Canadian oil and gas company Bellatrix Exploration announced IIQ 2019 results. This followed the restructuring of the company’s balance sheet, as we’ve discussed previously on April 17 and June 5 2019. There were no fireworks in the latest results. Nonetheless, despite the $110mn reduction in debt, the company remains vulnerable to market conditions. We noted in the press release that debt to EBITDA is at 4.3x, not that far off the maximum covenanted multiple of 5.0x.
The company retains a Corporate Credit Rating of 3. Total exposure at June 30 2019 was $95.9mn, mostly in second lien debt due in 2023 and valued close to par. All outstandings are held by FS-KKR Capital funds, with the bulk retained by FS Energy & Power ($72mn). No immediate cause for concern – which is why Bellatrix is on our Watch List – but given the hit and miss nature of the business and its exposure to global energy markets, this credit will continue to be worth watching.