Phoenix Energy One, LLC ($PHXE-P)
Phoenix Energy One filed an 8-K disclosing Amendment No. 11 to its Amended and Restated Senior Secured Credit Agreement with Fortress Credit Corp., effective October 21, 2026. The amendment permits issuance of secured junior lien notes and provides a waiver of the Current Ratio covenant (minimum 0.90:1.00) for months from April 30, 2026 through December 31, 2026. The filing also disclosed a Wellbore Participation and Assignment Plan allowing employees and executives to acquire non-operating working interests in 38 Company-operated wells in North Dakota and Montana.
- Amendment No. 11 permits the Company to issue secured junior lien notes, adding a new debt layer to the capital structure.
- Fortress granted a waiver of the Current Ratio covenant (minimum 0.90:1.00) for each calendar month from April 30, 2026 through December 31,
- The Wellbore Participation Plan lets employees acquire non-operating working interests in 38 Company-operated wells in North Dakota and
- Plan participants receive a net revenue interest equal to 80% of their elected working interest, with no distributions until all development
- The Credit Agreement has now been amended at least 11 times since the August 2024 original, signaling persistent covenant pressure.
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An 11th amendment in just over two years plus a multi-month financial-covenant waiver is a bright red flag on liquidity, even as the junior lien capacity offers a potential lifeline.
Small-cap E&P firms frequently use employee wellbore participation plans to conserve cash on development costs while aligning incentives. The repeated credit-agreement amendments mirror broader stress among leveraged independent operators facing tight liquidity.
The Current Ratio waiver (below 0.90:1.00 through December 2026) signals liquidity stress. The junior lien notes add leverage and subordinate existing creditor claims. Repeated amendments — now 11 — suggest ongoing difficulty maintaining original covenant compliance.
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