As of May 1, some 27 oil and gas exploration and production companies had filed for bankruptcy protection. Since then four more have sought protection, with two filings announced Monday morning.
SandRidge Energy announced that it has filed for Chapter 11 bankruptcy protection with a prearranged reorganization agreement with creditors. Under the terms of the deal, which still must be approved by the court, creditors will exchange $3.7 billion in debt for control of the company. SandRidge formerly traded under the ticker symbol SD and now trades over-the-count as SDOC.
The company said its capital structure will include $425 million in a reserve-based lending facility and $300 million in mandatorily convertible debt. SandRidge expects to have ample liquidity to fund ongoing operations and capital programs through its emergence from bankruptcy without the need for additional debtor-in-possession financing or other capital.
Breitburn Energy Partners L.P. (NASDAQ: BBEP) also announced a Chapter 11 filing Monday morning. The company said it will continue to operate without interruption using cash from operations, cash on hand and debtor-in-possession financing of $75 million. Breitburn had reported debt totaling $3.4 billion at the end of the first quarter of 2016. Arrangements with creditors are still being discussed.
Eleven companies filed for bankruptcy in April alone, according to Haynes and Boone’s bankruptcy monitor. April’s debt total of $14.9 billion was the highest monthly total the firm has recorded since it began tracking oil patch bankruptcies in January 2015. April’s largest bankruptcy was Pacific Exploration & Production, with debt totaling $5.32 billion.
Last week Linn Energy LLC (NASDAQ: LINE) added more than $9 billion to this year’s debt total and Penn Virginia Corp. (NYSE: PVA) chipped in $1.2 billion in its filing. Added to the Breitburn and SandRidge filings, the first half of May has seen bankruptcy filings totaling around $17.5 billion in debts.
According to Haynes and Boone, total bankruptcy filings in $2015 amount to $17.22 billion in secured and unsecured debt. The first four months of 2016 added another $17.1 billion to the total, and it appears that May’s total will be larger than either prior total.