EP Energy Corp (OTCMKTS: EPEG) sentiments and prospects just turned sour. Delisting from the Nasdaq stock exchange appears to be the last nail on the coffin, coming on the heels of one of the worst routs in the market. The stock has shed more than 90% in market value over the past year and now find itself languishing at all-time lows.
EP Energy Price Analysis
The stock has continued to take a beating on investors reacting to dismal financial and operating results. Wider than expected net loss has all but continued to compound the Company’s woes. Lower oil production levels in the recent quarter is another tailwind that continues to take a toll on the stock’s market sentiments.
It thus does not come as a surprise that the stock has continued to tank if recent price action activity is anything to go by. With bears in control, the stock has resorted to trading in a steep downtrend as it continues to register lower lows.
A plunge below the $1 mark has since left EP Energy exposed to further drops probably to the $0.01 psychological level. For the stock to turn bullish, be it in the short term, then it will have to bounce back and retake the $1 psychological level. Below the critical technical level, it remains vulnerable to further drops given the underlining descending trend line.
What Does EP Energy Do?
EP Energy is an energy company that develops oil and natural gas assets. The exploration and mining company boasts of high-quality asset portfolio made up of programs in the Eagle Ford, Permian, and Northeastern Utah areas. It also boasts of diverse asset base made up of significant reserves and large positions in core development programs.
Nasdaq Delisting Woe
EP Energy has taken a significant hit a development that has seen it lose its core status in the Nasdaq stock exchange. Delisting of the stock from the exchange follows share price levels tanking to abnormally low levels, below the $1 mark, consequently failing to comply with the exchange listing requirements.
Delisting from the NASDAQ has since resulted in the stock trading in over the counter markets. However, management has confirmed they will remain subject to public reporting requirements as stipulated by the SEC.
“The transition to the over-the-counter markets will not affect the company’s business operations,” management said.
Waning Financial and Operational Results
EP Energy finds itself in the current mess on its financial and operational results taking a beating over the past year. For instance, the Company is fresh from reporting a wider than expected net loss of $140 million in the recent quarter compared to a profit of $18 million reported a year ago. The net loss included a $95 million loss in financial derivatives.
The Company had lower production levels in Q1 2019 compared to the first quarter of 2018. Average daily production stood at 73.2 Moe/d affected by lower net oil completions in the quarter compared to Q4. Production levels in Q2 could drop further as EP energy is projecting production of between 70-73 Moe/d.
EP Energy exited Q1 with $10 million in Cash and $180 million in borrowings outstanding on its RBL facility. The Company’s total debt as of the end of the quarter stood at $4.5 billion.
Declining financial position compounded by lower production level and soaring debt levels leave EP Energy in a precarious position. Concerns about the Company’s ability to continue operating as a going concern look set to gain momentum.
When the Company went public in 2014, its share price traded as high as $22. However, ever since the stock has continued to trade lower with short sellers continuing to push the stock lower.
The Company finds itself in the current mess on failing to generate significant value from its rich array of unconventional properties. The Company initially owned an array of liquid-rich properties stretching Texas, Louisiana as well as Raton Basin and the Rocky Mountains.
The one bright side for the stock is that it is now trading on the OTC Markets. This is the land of opportunity where many penny stock investors look for delistings that can become runners again. We believe there will be plenty of opportunities in EPEG for traders.
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Disclosure: We have no position in EPEG and have not been compensated for this article.