Energy & Exploration Partners Files Chapter 11

Energy & Exploration Parters file Chapter 11

Recently, major Texas oil drilling company Energy & Exploration Partners announced that it had filed for Chapter 11 bankruptcy protection. According to the Fort Worth Star-Telegram, the company decided to seek Chapter 11 bankruptcy protection after its three major creditors initiated Chapter 7 involuntary bankruptcy proceedings against it on Nov. 25.

Energy & Exploration Partners accrues massive debt load

In its bankruptcy filings, Energy & Exploration Partners cited a general market downturn as oil prices collapsed from over $100 to under $40 per barrel. This was exacerbated recently after OPEC’s decision to maintain current levels of production, which will continue to add to the existing surplus in global markets. Further, with natural gas prices witnessing a stark decline, the company said it had no other choice but to seek bankruptcy protection.

The company also stated that damage to its oil fields was a significant factor in its decision. According to a Fuel Fix report, Energy & Exploration’s oil wells were damaged by record levels of rain in Texas this year. As a result, approximately 50 percent of its crude production operations were cut off. This came after it received a $700 million loan to finance the acquisition of an oil field in the Fort Worth area in 2014.

Energy & Exploration Partners listed assets ranging from $500 million to $1 billion, but outstanding debt between $1 billion to $10 billion. According to the Star-Telegram, it also claimed that its operating company had up to $1 million in assets with liabilities listed at approximately $500 million to $1 billion. Its largest creditors included U.S. National Bank Association, which it owed more than $388 million, and Chesapeake Exploration, with over $23 million. Meanwhile, the operating company owed nearly $3 million to Nabors Drilling, more than $2 million to Cactus Pipe & Supply, almost $2 million to Schlumberger Technology and $1 million to Baker & Hughes.

The company’s reorganization plan calls for DIP financing

Energy & Exploration Partners plans to maintain operations so that it can emerge from the bankruptcy process with a functional business model. According to Oil and Gas Investor magazine, as part of its restructuring agreement, the company has reached a deal with its major creditors for $135 million in new debtor-in-possession financing to fund its operations.

The significance of the filing continues downward trend

Energy & Exploration Partners becomes the latest of 18 oil drilling and extraction companies that have filed for Chapter 11 bankruptcy protection this year. According to the Star-Telegram, Quicksilver Resources began the downward trend of major energy producers after it listed $1.21 billion in assets and $2.35 billion in debts. Natural Gas Intel reported that these energy producers have not been able to withstand the collapse of energy commodities prices. In fact, so far this year, 36 North American energy producers and exploration companies with more than $13 billion in debt, including Samson Resources Corp., Sabine Oil & Gas, Quicksilver Resources Inc. and Milagro Oil & Gas Inc. have sought bankruptcy protection.

Are you a creditor in a bankruptcy?  Have you been sued by a bankrupt?  If you have any questions about your rights, please contact me, Joel Glucksman, at 201-806-3364.