Bankruptcy continued to plague the North American energy industry throughout 2016 with more than $70 billion in debt filed in the upstream sector alone.In total, there have been 232 bankruptcy filings in the U.S. and Canada that represent $96.2 billion in debt since the beginning of 2015, according to a year-end bankruptcy report from Haynes and Boone LLP. That includes exploration and production, oil field services and midstream sectors.
Source: Haynes and Boone: Texas represents bulk of energy bankruptcies since 2015 – Houston Business Journal
Houston-based Bennu Oil and Gas LLC has filed for Chapter 7 bankruptcy in the Southern District of Texas in Houston.Bennu is an oil and gas offshore production company, according to archives of its now-defunct website. The company is bringing $32.5 million in assets and $724.1 million in debts into bankruptcy, according to court filings.
Source: Bennu Oil and Gas LLC files for Chapter 7 bankruptcy – Houston Business Journal
Key Energy Services Inc., an oil-well servicer, filed for chapter 11 protection on Monday after securing its creditors’ support for a debt-restructuring deal.Key said in court papers that its restructuring plan, which is subject to the approval of the U.S. Bankruptcy Court in Wilmington, Del., will cut its $1 billion in liabilities to about $250 million so it can emerge from chapter 11 with a “manageable debt load.”
Source: Key Energy Files for Chapter 11 After Striking Restructuring Deal – NASDAQ.com
Energy investors have long hoped that falling prices would solve themselves by driving producers into bankruptcy and stanching the flood of excess supply, but it hasn’t worked out that way.
Their owners may be bankrupt, but the sprawling mines of Wyoming’s Powder River Basin are still churning out coal. It is the same story in oil fields along the Gulf Coast and with shale-gas wells in the Rocky Mountains.Energy investors have long hoped that falling prices would solve themselves by driving producers into bankruptcy and stanching the flood of excess supply. It turns out that while bankruptcy filings are up, they have barely impacted fossil-fuel markets.About 70 U.S. oil and gas companies filed for bankruptcy in 2015 and 2016. They now produce the equivalent of about 1 million barrels a day, about the same as before they declared bankruptcy, according to Wood Mackenzie. That represents about 5% of U.S. oil-and-gas output.That resilience has kept energy inventories flush and prices capped. Oil shot to $50 a barrel this summer, but has had trouble making much progress beyond that mark. On Friday, oil futures in New York rose 0.4% to $50.85 a barrel.The theory that bankruptcies would help balance the market “was misguided to begin with,” says Roy Martin, a research analyst at energy consultancy Wood Mackenzie. “And people are starting to come around to that now.”This is exactly the way chapter 11 was meant to work. The process is designed to save companies that can be saved, and many energy companies are using it to lighten their heavy debt loads, adapt to lean times and keep producing.
Source: Bankruptcy Bust: How Zombie Companies Are Killing the Oil Rally – WSJ
LOS ANGELES (AP) — The bankruptcy of the Hanjin shipping line has thrown ports and retailers around the world into confusion, with giant container ships marooned and merchants worrying whether tons of goods will reach their shelves.The South Korean giant filed for bankruptcy protection on Wednesday and stopped accepting new cargo. With its assets being frozen, ships from China to Canada found themselves refused permission to offload or take aboard containers because there were no guarantees that tugboat pilots or stevedores would be paid. Hanjin called us and said: ‘We’re going bankrupt and we can’t pay any bills — so don’t bother asking,’ ” said J. Kip Louttit, executive director of the Marine Exchange of Southern California, which provides traffic control for the ports of Los Angeles and Long Beach, the nation’s busiest port complex.
Source: Hanjin Bankruptcy Causes Global Shipping Chaos, Retail Fears | World News | US News
Houston-based Key Energy Services Inc. and some subsidiaries expect to file a prepackaged Chapter 11 plan of reorganization by Nov. 8.The restructuring is expected to reduce Key’s debt by $725 million to about $250 million. The onshore, rig-based well-servicing contractor plans to begin Chapter 11 proceedings in Delaware once senior note holders and lenders officially vote on the plan and an $85 million rights offering expires.
Source: Key Energy Services plans to restructure under Chapter 11 – Houston Business Journal
Halcon Resources Corp., the oil and gas explorer founded by wildcatter Floyd Wilson, filed for bankruptcy as part of a restructuring agreement reached with key lenders in May.
The agreement would eliminate $1.8 billion in debt and $222 million in preferred stock, the Houston-based company said at the time. On June 10, Halcon said a majority of holders had accepted the restructuring, which will be implemented through a Chapter 11 bankruptcy.
The filing Wednesday in Delaware federal bankruptcy court listed $3.12 billion in debt and $2.85 billion in assets.
As oil prices surged toward $100 a barrel in 2010, Key Energy Services doubled down on horizontal drilling and began building heavy-duty service rigs. Four years later, the company had spent more than $1 billion on equipment and other capital investments as it rode the shale boom, piling up debt along the way.Then the market turned. Crude prices plunged, drillers fled oil fields, and Key’s cash flow evaporated. But the debt didn’t.Today, Key Energy is on the verge of bankruptcy, struggling under the weight of net debt – total debt minus available cash – that nearly tripled over the past decade to $760 million. Like many other energy firms, Key finds it nearly impossible to pay down loans it banked in days of plenty, now that prices have dipped below $50 a barrel.”The market caught Key off guard,” said Trey Whichard, Key’s former chief financial officer, “and it caught a lot of companies off guard.”Key Energy is an example of how oil and gas firms, supported by banks and other lenders, turned a boom into a bubble and why, now that it has burst, the energy industry faces a slow and painful recovery. Even if companies can avoid bankruptcy, the costs servicing heavy debt loads will tie up money that might otherwise be used to buy new equipment, launch new products, and hire new workers. A Houston Chronicle analysis of 130 publicly traded energy companies found that their combined net debt, a vital indicator of the health of a company, jumped sevenfold in a decade, ballooning from $60 billion in 2005 to $440 billion last year.”Something is going to have to give,” said Ed Hirs, an energy fellow in the University of Houston’s economics department and managing director for a small oil and gas exploration company on the Gulf Coast. “This is not a sustainable trend.”
Source: Heavy debt loads could slow energy’s recovery – Houston Chronicle
C&J Energy Services Ltd. (NYSE: CJES) reached a restructuring support agreement with certain lenders last week and plans to begin a reorganization under Chapter 11 of the U.S. Bankruptcy Code on or before July 17, the company disclosed in a July 11 filing with the U.S. Securities and Exchange Commission.The reorganization, which will allow C&J to eliminate approximately $1.4 billion in debt, includes a debt-to-equity conversion and an equity rights offering.
Source: C&J Energy Services reaches restructuring agreement, to file for Chapter 11 bankruptcy – Houston Business Journal
C&J Energy Services Ltd. (NYSE: CJES) announced on June 1 that it has reached a month-long forbearance agreement to avoid default while it continues discussions with lenders regarding the company’s debt and capital structure.Lenders agreed not to exercise default remedies or accelerate any indebtedness through June 30.
Source: C&J Energy reaches forbearance agreement, continues discussions with lenders – Houston Business Journal