Saratoga Resources Inc. filed for Chapter 11 bankruptcy protection for itself and some operating subsidiaries in the U.S. Bankruptcy Court for the Western District of Louisiana in Lafayette, the company said June 18.

Saratoga will operate its business and manage its properties as debtors in possession. There is sufficient cash to run the business in the near term, without the need for debtor-in-possession financing, the company added.

Low oil prices, which lowered revenues and profitability, combined with challenges to field operations. There was also an arbitration award against Saratoga. Efforts were made to remedy the operation issues, and operating costs were lowered through a containment program. Problems in the last year included decreased run times, gas-lift gas shortages, mechanical issues and flowline capacity constraints.

Thomas F. Cooke, chairman and CEO, said Saratoga entered forbearance agreements with principal lenders, and that the cost-cutting program could save more than $13 million in lease operating expense and general and administrative costs.

Cooke said legal claims concern Harvest Operating, which holds a $3.7 million arbitration award. The arbitration is outstanding, he said, and Saratoga’s separate legal claims might offset—wholly or partly—the award. Because the arbitration is unresolved, Saratoga’s management and lenders decided that court-administered reorganization was necessary, he added.

Cooke said the company hopes the Chapter 11 filing will “avert adverse action by Harvest Operating while still permitting us to pursue our legal claims against Harvest Operating as well as to arrive at a satisfactory restructuring or retirement of our existing secured debt while continuing to develop our holdings, grow our production and revenues and reduce our operating expenses.”

The monthly reports will be filed to the bankruptcy court under Form 8-K.

Houston-based Saratoga Resources Inc. produces and develops oil and natural gas in Louisiana state waters and in the shallow-water Gulf of Mexico.

Offshore