A pipeline company laid out its worst-case scenario, and now the stock is getting whacked (AZUR)

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It's not looking good for Azure Midstream Partners.

After a three-week delay, the limited partnership reported fourth-quarter results Wednesday. It saw a net loss of $1.8 million during the quarter. 

Azure is a master limited partnership (MLP) that operates transport pipelines for oil and gas. 

Last year was particularly bad for MLPs, which some investors use a fixed-income alternative. They're believed to be quite resilient from oil-price swings, although that's not always the case. 

And clearly not with Azure. 

The company warned in its earnings release that it may not be able to meet certain ratios and covenants in its credit agreement because of the huge drop in oil and gas prices.

Shares fell as much as 14% to $1.21 in trading on Thursday. 

It said in the statement that based on current expectations for commodity prices this year, it will not be able to meet all the terms of its credit agreement unless they are waived. 

Here's the worrying part (emphasis ours):

Absent future waivers or amendments, failure to meet these covenants and ratios would result in a default and, to the extent the applicable lenders so elect, an acceleration of the existing indebtedness, causing such debt of approximately $231.7 million to be immediately due and payable.  The Partnership does not currently have adequate liquidity to repay all of its outstanding debt in full if such debt were accelerated.

As a result of this potential default and acceleration, the Partnership's independent registered public accounting firm has informed us that its report on the Partnership's consolidated financial statements to be included in the Partnership's annual report on Form 10-K will include an explanatory paragraph to the effect that these conditions raise substantial doubt about the Partnership's ability to continue as a going concern for a reasonable period of time. 

The company had suspended dividend payments. 

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