NEW YORK (TheStreet) -- AtlasResource Partners (ARP) stock is plummeting by 31.88% to $1.56 in early afternoon trading on Monday, after the company announced an amendment to its revolving credit facility and its semi-annual re-determination of its credit facility borrowing base.
Based in Pittsburgh, Atlas is a developer and producer of natural gas, crude oil and natural gas liquids and operates across the U.S.
Atlas' revised its credit facility borrowing base to $700 million, a 6.7% decrease from its previous level, the company said in a statement.
Atlas reached an agreement with its commercial bank lending group to amend certain terms of its revolving credit facility, such as improved terms on its leverage covenants and giving the company the ability to add subordinated secured debt.
The amendment will allow Atlas to navigate "the turbulent energy environment over an extended period of time," CEO Daniel Herz said in a statement.
"The modest reduction in our borrowing base reflects the commodity price protection the Partnership has in place as well as ARP's high-quality, low-decline asset base," Herz said.
Separately, TheStreet Ratings team rates ATLAS RESOURCE PARTNERS LP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
We rate ATLAS RESOURCE PARTNERS LP (ARP) a SELL. This is driven by a few notable weaknesses, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its deteriorating net income, generally high debt management risk, disappointing return on equity, generally disappointing historical performance in the stock itself and feeble growth in its earnings per share.
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 29853.5% when compared to the same quarter one year ago, falling from $1.89 million to -$560.85 million.
- The debt-to-equity ratio is very high at 6.15 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company. Along with this, the company manages to maintain a quick ratio of 0.50, which clearly demonstrates the inability to cover short-term cash needs.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Oil, Gas & Consumable Fuels industry and the overall market, ATLAS RESOURCE PARTNERS LP's return on equity significantly trails that of both the industry average and the S&P 500.
- Despite any intermediate fluctuations, we have only bad news to report on this stock's performance over the last year: it has tumbled by 84.99%, worse than the S&P 500's performance. Consistent with the plunge in the stock price, the company's earnings per share are down 8085.71% compared to the year-earlier quarter. Naturally, the overall market trend is bound to be a significant factor. However, in one sense, the stock's sharp decline last year is a positive for future investors, making it cheaper (in proportion to its earnings over the past year) than most other stocks in its industry. But due to other concerns, we feel the stock is still not a good buy right now.
- ATLAS RESOURCE PARTNERS LP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. The company has reported a trend of declining earnings per share over the past two years. However, the consensus estimate suggests that this trend should reverse in the coming year. During the past fiscal year, ATLAS RESOURCE PARTNERS LP reported poor results of -$7.76 versus -$1.88 in the prior year. This year, the market expects an improvement in earnings ($0.16 versus -$7.76).
- You can view the full analysis from the report here: ARP
Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.