Distress flares continue to streak across the E&P sky as bankruptcy filings began to fly April 14-15 and other companies indicated they are on a collision course with creditors.

Several of the companies have been in survival mode some time. Goodrich Petroleum Corp. and Energy XXI Ltd. both announced they would seek bankruptcy protection. Triangle Petroleum Corp. (AMEX: TPLM) and Linn Energy LLC (NASDAQ: LINE) are also showing signs that commodity prices have worn them down.

Goodrich said April 15 that it filed for Chapter 11 bankruptcy protection in the Southern District of Texas in Houston to sort out its financial affairs. The company’s plan is to eliminate about $400 million in debt from its balance sheet through a deal it worked out with lenders prior to the filing.

Goodrich has focused on developing the Tuscaloosa Marine Shale (TMS) since 2014 while selling off various assets, including the 2015 divestiture of its oil production in the Eagle Ford. It retains 17,000 net acres in the Eagle Ford.

On April 14, Energy XXI also filed for bankruptcy after reaching a restructuring agreement with the holders of 63% of its debt. Energy XXI, which also filed in Houston, said its plan will “eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and position the company for long-term success.”

The company, which has $180 million in cash, said operations will continue as normal throughout the court-supervised financial restructuring process, including paying royalty and surety obligations in the ordinary course.

Energy XXI's president and CEO John Schiller said the bankruptcy is the next step to respond to the market environment.

“Over the last several months, we have worked to actively manage our balance sheet, and after thoroughly evaluating our options with the help of our outside advisors, we determined that entering these agreements and implementing them through a court-supervised process is the best course of action for Energy XXI and all our stakeholders,” Schiller said.

Schiller said production is on track as the company focuses operations on low-risk, high-re­turn projects. Energy XXI is an oil-focused company with assets in south Louisiana and on the Gulf of Mexico shelf. The company has more than 750,000 leasehold acres and operates 10 of the largest oilfields on the GoM shelf.

“We thank our employees for their continued hard work and dedication, and we look forward to working with our vendors and partners as we move through this process and position Energy XXI to emerge as a stronger company," he said.

The company said it should have sufficient liquidity and operational revenue to continue its operations and support the business in the ordinary course during the financial restructuring process.

Tired Of Trying?

Other companies appear to be on the verge of hard decisions.

On April 15, Linn Energy said it would make payments on debt but is looking at strategic alternatives for its balance sheet, including jumping into a Chapter 11 life raft.

The company has engaged its financial and legal advisors along with lenders in discussions on how to best “reduce the company's debt and ensure its long-term liquidity needs are met, including the possibility of restructuring under a Chapter 11 plan of reorganization.”

Linn previously deferred interest payments from its original due date of March 15, said Kevin Smith, an analyst for Raymond James.

Linn also announced that the borrowing base on both its Linn and Berry credit facilities will remain unchanged until May 11, as long as the company does not go into default, Smith said.

“If Linn had failed to make interest payments today, the grace period would have ended and the company would have gone into an event of default,” he said.

The company now has additional time to negotiate a restructuring agreement with its creditors.

Smith said in a March 15 report that management “has seemingly resigned itself to the fact that the company is going to file for bankruptcy.”

“Management has options but seems tired to trying,” including a $1.8 billion hedge book and forecasted strong free cash flow in 2016 that would give it time to wait for recovery, he said.

Smith said he expected LINN to attempt a conversion into a C-corp. avoid the tax liability of an MLP filing bankruptcy.

“We continue to recommend that investors of both equities (LINE and LNCO) sell their stock prior to any bankruptcy filing” or participate in an exchange offer to avoid potentially tax liability, Smith said.

Significant Doubt

Also on the lookout for life jackets: Triangle Petroleum. The company said April 14 that while the company is continuing to reduce capex, reduce costs and maximize cash flows from operations, its liquidity outlook remains bleak, according to a filing with the Securities and Exchange Commission (SEC).

Underlying the duress for the Williston Basin-focused oil company is the combination of high leverage and low commodity prices for its subsidiaries, E&P Triangle Petroleum USA (TUSA) and services company RockPile Energy, said Gordon Douthat, senior analyst with Wells Fargo Securities LLC.

In March, Triangle had started a process to explore and evaluate strategic alternatives for its individual business units and the overall company.

However, at the end of its last fiscal year, TUSA had cash on hand of $115.8 million and $103.7 million available on its revolver, which has since been drawn down prior to upcoming spring redeterminations on May 1.

“Management expects a significant reduction in the TUSA borrowing base, which would result in a borrowing base deficiency,” Douthat said.

RockPile entered into an amendment to its credit agreement which waives any default or event of a default with regard to its financial covenants for two quarters.

“However RockPile is no longer permitted to draw additional funds,” Douthat said. “While RockPile’s debt is non-recourse to Triangle, if further revolver amendments are not enacted starting … or restructuring does not take place, Triangle is at risk of losing control of RockPile.”

The company intends to spend money working on a 14-well backlog. But about 52% of its undeveloped acreage is scheduled to expire in fiscal year 2017 and 40% more in fiscal year 2018 without drilling or lease extension payments.

“Although TPLM is run by a strong management team, increasing leverage and reduced growth expectations will likely serve as headwinds to shares,” Douthat said.

Darren Barbee can be reached at dbarbee@hartenergy.com.