?Edge Petroleum Corp., Houston, (Nasdaq: EPEX) has hired Houston-based energy investment-banking firm Parkman Whaling LLC to seek strategic alternatives due to credit exposure following a failed reverse merger with privately held, Oklahoma City-based Chaparral Energy Inc. and a reduction in its borrowing base from $240 million to $125 million.


Chaparral and Edge abandoned the deal, in which Chaparral would have become a publicly traded company, in mid-December, citing “no reasonable expectation” that terms of the agreement—primarily financing—could be met by the termination deadline of Dec. 31.


Edge’s borrowing base on its fourth amended and restated credit agreement was lowered on Jan. 8 by the company’s lenders and with the advances outstanding and aggregate existing letter-of-credit exposure, Edge’s debt exceeded its borrowing base by approximately $114 million.


To pay the credit-facility deficit, Edge is considering either prepaying the deficiency in six monthly installments or pledging additional oil and gas properties as collateral.


The companies announced the reverse merger in July. Edge twice postponed its annual shareholders’ meeting to vote on the merger. The meeting was last scheduled for Dec. 29, but the deal was canceled in advance of that date.

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