BY Fraser Tennant
In what is its second filing in four years, independent oil and natural gas exploration and production company Chaparral Energy, Inc. has filed for Chapter 11 bankruptcy protection.
Chaparral’s filing is the latest in a string of bankruptcies in the energy sector this year, a list which includes Gavilan Resources, Whiting Petroleum, Echo Energy Partners, Ultra Petroleum, Skylar Exploration, Diamond Offshore, Freedom Oil and Gas, and Templar Energy. Virtually all cited the devastating impact of the coronavirus (COVID-19) pandemic.
Through the Chapter 11 process – part of a restructuring support agreement (RSA) with certain of its funded debtholders to pursue a prepackaged plan of reorganisation – Chaparral expects to significantly restructure its balance sheet and strategically position itself for long-term growth.
Chaparral previously filed for bankruptcy protection during the oil price slump in 2014-16, emerging from Chapter 11 in March 2017.
“While we have taken carefully measured and decisive action to address the challenges of 2020, the overall impact to the energy industry, including Chaparral, has been severe,” said Chuck Duginski, chief executive of Chaparral. “Therefore, after thorough analysis of our strategic options, we determined that a voluntary Chapter 11 filing with broad creditor support provides the best course for Chaparral and its stakeholders.”
Chaparral intends to restructure its balance sheet by equitising all $300m of its existing unsecured bond obligations and substantially bolster its liquidity position through $175m in lending obligations under a reserves-based exit facility and a fully backstopped $35m new money convertible note rights offering.
“A swift restructuring will right-size our balance sheet, improve our cost structure and best position Chaparral for the future,” added Mr Duginski. “Importantly, we intend to maintain normal operations and meet all of our trade commitments timely and under their existing terms.”
Founded in 1988 and headquartered in Oklahoma City, Chaparral Energy is an independent oil and natural gas exploration and production company focused in the oil window of the Anadarko Basin in the heart of Oklahoma.
Mr Duginski concluded: “This restructuring will allow us to continue to efficiently operate without interruption and focus on delivering strong results. I would like to thank our employees, contractors, suppliers and customers for their unwavering commitment to Chaparral.”
News: Shale driller Chaparral Energy files for bankruptcy due to pandemic woes