Dallas, Texas 02/06/2014 (FINANCIALSTRENDS) – The $758 million market capped oil, gas drilling and exploration firm Approach Resources Inc. (NASDAQ:AREX) has managed to renegotiate and arrive a amendment to its 2008 dated master credit agreement with its creditors consortium, led by JPMorgan Chase Bank, N.A. The amendment referred to as the “The Seventeenth Amendment” for regulatory filing purposes allows a greater flexibility for the oil firm to hedge its production prices, there by opening up new avenues to earn revenue by entering into “commodity derivative contracts on a rolling basis”.
The changes in the terms of the credit agreement will allow Approach Resources Inc. (NASDAQ:AREX) “up to 85% of projected production from proved oil and gas properties for the twenty-four (24) months and up to 100% of projected production from proved producing oil and gas properties from the last day of the twenty-fourth (24th) months” from the date of the news terms commencement. The new contract drawn up also allows Approach Resources Inc. (NASDAQ:AREX) to hedge up to 85 percent of its projected production from the last day of the identified thirty sixth month and will last till sixtieth month, from the day the new rate management terms start.
These changes in the terms of its credit agreement is expected to provide the firm more leverage while determining pricing for its produce and allow it to venture into the broader emerging markets where the demand for its produce is more pronounced. The oil maker in the past 12 months has managed to generate revenue of $158 million and has managed to retain $7.1 million as net earnings in the same time period. The changes in the credit terms has been made possible by the steady build up in its production facilities over the past few quarters, which has in turn provided its creditors with more confidence to allow the oil producer more leeway in the terms of its credit.
