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A Look at Sanchez Production Partners’ Liquidity

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SPP’s liquidity

After a debt repayment scheduled for November 23, 2016, Sanchez Production Partners (SPP) anticipates having $148 million in debt outstanding under its credit facility. The credit facility has a borrowing base of $205.1 million and outgoing letters of credit totaling ~$15 million related to the funding of remaining capital commitments to Carnero Processing and Carnero Gathering LLC.

SPP projects pro forma liquidity on November 23, 2016, of ~$53.1 million. This liquidity includes projected borrowing capacity net of outstanding letters of credit plus cash and cash equivalents after the scheduled debt repayment.

The reserve-based lending component of SPP’s borrowing base is scheduled for redetermination in 4Q16, and the midstream component of the borrowing base is scheduled for redetermination during 1Q17.

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Public offering

Sanchez Production Partners partly raised funds for the acquisitions we discussed in the previous parts of this series from a public offering of ~6.5 million common units at an offering price of $11 per unit and a private placement of ~2.3 million common units to Sanchez Energy (SN).

Distributions

In October 2016, Sanchez Production Partners increased its 3Q16 distributions to $0.4246 per unit. This total represented a fourth consecutive 1.5% increase in distributions. SPP paid an initial quarterly distribution of $0.40 per unit in November 2015.

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