SandRidge Energy and Breitburn Energy Partners became the latest companies to succumb to the market forces and file for Chapter 11 bankruptcy protection on Monday.
SandRidge Energy
SandRidge reached an agreement with the majority of its lenders and bondholders to swap $3.7 billion in debt for control of the company, and will enter into a pre-arranged restructuring. Roughly two thirds of the creditors supported the arrangement.
The Company projects having ample liquidity to fund its ongoing operations and its capital programs throughout the Chapter 11 and upon emergence thereafter, without the need for debtor-in-possession financing or other additional capital. Among its initial bankruptcy request is the authority to pay operating expenses associated with production activities, royalties and wages to its workers. The company also intends to pay all suppliers and vendors in full during the bankruptcy.
SandRidge drills for oil and gas in Oklahoma, Kansas and Texas, where it has 4,411 gross producing wells and more than 2 million gross acres under lease. As of Dec. 31, it had four rigs in operation. The company listed assets of $7 billion and debts of about $4 billion in its chapter 11 petition filed with the bankruptcy court.
“We are pleased that our creditors recognize the long-term value SandRidge and its employees can create with an improved balance sheet. The new capital structure will allow the Company to concentrate on oil and gas exploration and development in our active Oklahoma and Colorado project areas,” said James Bennett, SandRidge President and CEO. “We look forward to completing this next phase of the process quickly with minimal disruption to our business.”
Breitburn Energy Partners
Breitburn Enrgy Partners also announced on Monday that the company was filing for Chapter 11 bankruptcy and plans to reorganize.
Breitburn said it expects to continue operating without interruption and will have enough liquidity to fund its restructuring process through a combination of money from its operations, cash on hand and $75 million in debtor-in-possession financing.
Over the last 30 days, Breitburn has been in discussions with lenders and bondholders in regards to a potential restructuring. No agreement was announced, but Breiatburn hopes to utilize Chapter 11 to finalize those discussions and take action to maximize the value of the ongoing business.
In a statement released Monday, the company said the continued decline of oil and natural gas prices has “placed significant financial stress” on the company and made Breitburn’s “existing debt burden unsustainable.”
More than 70 North American exploration-and-production companies have filed for bankruptcy protection since the beginning of 2015, based on data from law firm Haynes and Boone LP.
