Soreide Law Group is investigating claims relating to BreitBurn Energy Partners (NASDAQ: BBEP) purchased through Merrill Lynch stock brokers. Upon information and belief, Bank of America was one of the largest debt holders in BreitBurn, and Merrill Lynch, which is owned by Bank of America, maintained a buy rating on this position as it dropped all the way down to nearly nothing.
BBEP’s 52-week range: 0.46 - 7.92
BreitBurn faces many of the same problems as Linn Energy and other oil and gas stocks. The upcoming borrowing base may force it to make a similar move, like Linn Energy, in maxing the borrowing and preparing for a debt restructuring. BreitBurn needs nearly $90 oil to get the leverage ratio below 5x.
BreitBurn may have alternative support from EIG, which has already invested $1 billion in BreitBurn's preferred units and secured debt. Oil must move up significantly in the next two months or banks will be using price decks that incorporate low future oil prices for their borrowing base. According to experts, BreitBurn's borrowing base could be reduced to $1 billion or less in April 2016, leaving it with a significant borrowing base deficiency.
BreitBurn's current debt levels are unsustainable. It remains to be seen whether EIG would be willing to put more money into BreitBurn giving it control of the company.
The upcoming borrowing base determination is likely to result in a borrowing base deficiency for BreitBurn and a borrowing base deficiency would force BreitBurn to suspend its preferred distributions. According to several experts, BreitBurn has two months left before the borrowing base reductions are likely to have serious repercussions for the company. Oil prices need to rise to at least $45 by April to avoid a restructuring.
If your Merrill Lynch stock broker or another broker/financial advisor recommended purchasing BreitBurn Energy Partners (BBEP) and you sustained significant financial losses, call Soreide Law Group for a free consultation with an attorney on how to potentially recover those losses at: 888-760-6552.
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