Another Oklahoma energy company seeks bankruptcy protection
The number of energy companies headquartered or operating in Oklahoma that file for bankruptcy continues to increase.
Gulfport Energy became the last and at least the ninth in the past two years to seek help on Saturday, when it filed for Chapter 11 status with the U.S. South District Bankruptcy Court of Texas .
Gulfport’s filing is based on a Restructuring Support Agreement (RSA), its petition says it has negotiated with lenders. He said the deal has also been accepted by investors who hold more than two-thirds of its senior unsecured debt. In addition, certain noteholders have agreed to support a minimum investment of $ 50 million in new money by agreeing to accept convertible preferred shares in exchange.
The company also proposes to issue $ 550 million of new senior unsecured notes under the plan to existing unsecured creditors of certain subsidiaries of Gulfport.
Gulfport intends to use this process to strengthen its balance sheet, restructure certain debt instruments, significantly reduce its intermediate cost structure and achieve a more sustainable capital structure. Officials said they intend to continue operating normally throughout the deal, noting that they have secured $ 262.5 million in financing from existing Gulfport lenders as part of its revolving credit facility. Gulfport has also received a pledge from its existing lenders to provide $ 580 million in exit financing for the Chapter 11 exit, officials added.
In the case, company officials said the bankruptcy would allow Gulfport to wipe out about $ 1.25 billion in debt, significantly reducing its expected future annual cash interest expense.
“Since the Gulfport leadership team was reconstituted in 2019, we have taken decisive steps to streamline our business, strengthen our balance sheet, focus on generating cash flow, exercise capital discipline and drive operational efficiency and cost reduction across the company, ”David M. Wood, CEO of Gulfport, said in a statement announcing the filing.
“Despite these efforts, our heavy legacy debt burden, in addition to significant firm legacy transportation commitments, created a balance sheet and cost structure that was not sustainable in the current market environment. After working diligently to explore all available strategic and financial options, the Gulfport Board of Directors has determined that initiating a Chapter 11 process is in the best interests of the company and its stakeholders.
Just the last
The parade of bankruptcies involving public and private companies headquartered or operating in Oklahoma began in May 2019, when White Star Petroleum, formerly part of the American Energy Partners of the late Aubrey McClendon, sought bankruptcy protection to get out of a large debt. . Ultimately, its assets were acquired by Houston-based Contango Oil & Gas for $ 132.5 million.
In September 2019, Alta Mesa Resources, a company active in the Oklahoma oil field, filed for bankruptcy with debt of more than $ 1 billion. Mach Resources, based in Oklahoma City, backed by Bayou City Energy Partners, acquired its resources for approximately $ 160 million.
More and more companies have taken their situation to court in an attempt to reorganize this year. In May of this year, Unit Corp. filed a claim, seeking to get rid of over $ 650 million in debt. This case, also filed in the South Texas District Bankruptcy Court, is continuing.
The month of June was particularly active.
Chisholm Oil and Gas Operating, a private company based in Tulsa, has filed for bankruptcy protection in an attempt to get rid of $ 517 million in debt. Court documents say a judge approved his final reorganization plan last month.
Oklahoma City-based Templar Energy also filed for bankruptcy, seeking to sell the direct interest it held in approximately 2,165 oil and gas wells in parts of northwestern Oklahoma and the Texas Panhandle to reduce his debt. In August, its assets were acquired by Presidio Petroleum for $ 91 million.
Then, Chesapeake Energy Corp. filed for bankruptcy, after negotiating a restructuring deal with most of its creditors that company officials say will create a return to profitability. If his proposal is ultimately approved, Chesapeake would exit the process with a $ 2.5 billion line of credit. Earlier this month, the company agreed to offload its assets from Anadarko Basin Mid-Continent through a bankruptcy-related auction for around $ 130.5 million to Oklahoma City-based Tapstone Energy.
Sable Permian Resources, another company that was originally part of McClendon’s American Energy Partners, also filed for bankruptcy protection in late June. His case, which is still in legal proceedings, sought to secure $ 150 million in funding to pay for continued operations as the bankruptcy continued.
And in August, Oklahoma City-based Chaparral Energy filed for bankruptcy and walked out of that process as a private operator in October with an additional $ 35 million in working capital.
Learn more about Gulfport
Gulfport operates in the Utica Shale in eastern Ohio and the SCOOP Woodford and SCOOP Springer games in Oklahoma. Earlier this year, the company announced that its employees were getting phased pay cuts (Wood’s salary as CEO, for example, was cut by 20% while board members agreed to cut 10% of their remuneration) and time off to keep its doors open.
He estimated the measures would reduce his general administrative expenses by $ 2-4 million this year and predicted he could save an additional $ 10 million in production costs by reworking contracts with service providers in his two areas. operating.
Gulfport officials said the company will provide information and updates on its process to Gulfportenergy.com/restructuration.