Oklahoma shale driller Chaparral Energy Inc. filed for Chapter 11 bankruptcy protection on Aug. 16, the latest U.S. energy sector casualty in recent months as COVID-19 crushes oil demand.
The company's assets and liabilities were in the range of $500 million to $1 billion, according to a court filing in the U.S. Bankruptcy Court in Delaware. It had around $421 million of debt outstanding at the end of 2019.
Chaparral said it will restructure its balance sheet by equitizing all $300 million of its unsecured debt and will operate during the bankruptcy process with the help of $32 million in cash on hand as of Aug. 14 and operating cash flow.
Lenders have been reining in on credit for shale drillers and Chaparral's borrowing limit was recently reduced to $175 million from $325 million. Reuters reported in March Chaparral was working with debt restructuring advisers to shore up its cash position.
This is the second time the company has filed for bankruptcy protection. The last time was during the oil price slump in 2014-16, from which it emerged in March 2017.
In a separate filing on Aug. 16, Chaparral's debtors said they have started the Chapter 11 cases to implement a "prepackaged plan of reorganization".
A trustee or examiner has not yet been requested and no committees have been appointed yet, the court filing said.
Chaparral had in May warned of its ability to continue as a going concern amid a historic plunge in commodity prices and said it had hired legal and financial advisers.
In recent months, debt-laden major shale independents such as Chesapeake Energy Corp. and Whiting Petroleum Corp. have succumbed to one of the worst crises in the oil industry. California Resources Corp. also filed for Chapter 11 after defaulting on interest payments.
A fall in economic activity due to the pandemic and a price war between top oil producers Russia and Saudi Arabia had resulted in crude dropping below $0 in April for the first time in history.
Recommended Reading
BPX Looks to Ramp US Production Over 60% by 2030
2024-05-16 - BPX Energy is looking to boost its U.S. production over 60% by 2030 as it considers bringing online a fourth processing facility in the Permian by mid-year 2025, Clark Edwards, the company’s vice president of development, said during SUPER DUG in Fort Worth.
ConocoPhillips: Permian Basin a ‘Growth Engine’ for Lower 48
2024-05-15 - ConocoPhillips views the Permian Basin as a “growth engine” within its Lower 48 portfolio, the company’s Midland Basin Vice President Nick McKenna said during Hart Energy’s SUPER DUG event in Fort Worth.
E&P Highlights: April 29, 2024
2024-04-29 - Here’s a roundup of the latest E&P headlines, including a new contract award and drilling technology.
E&P Highlights: March 11, 2024
2024-03-11 - Here’s a roundup of the latest E&P headlines, including a new bid round offshore Bangladesh and new contract awards.
E&P Highlights: April 22, 2024
2024-04-22 - Here’s a roundup of the latest E&P headlines, including a standardization MoU and new contract awards.