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
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
Eagle Ford Shale operator Atlas Resource Partners LP said Monday it expects to file Chapter 11 and has entered into a restructuring agreement with its lenders.
The Pennsylvania-based Atlas has 22 wells in Atascosa County, as well as operations that include acreage in Oklahoma, North Texas’ Barnett Shale gas field and the Marcellus Shale gas field in Pennsylvania.
The company said it expects to operate its oil and gas properties during restructuring and will continue to pay suppliers, employees and royalty owners. But it will emerge with a new name: Titan Energy LLC. Unit holders will be wiped out by the bankruptcy and will not be entitled to shares of the new company.
Source: Eagle Ford operator heads into bankruptcy
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
Linn Energy’s announcement that it has filed for Chapter 11 was significant in that its $8.28 billion in debt is the largest any upstream energy company has filed for bankruptcy in North America in 2016. However, it’s one of dozens so far this year and one of dozens more to come.Seventy-five companies have filed for bankruptcy since the downturn began. The expectation is that the number will climb to 150 filings before it’s over, according to Buddy Clark, a partner in the Houston office of Haynes and Boone LLP.
Source: Haynes and Boone predicts dozens more bankruptcies like Linn Energy – Houston Business Journal