Oil and Gas Bankruptcy Filings: March Madness with more to come
Texas saw two sizable back-to-back chapter 11 bankruptcy filings within the last week in the oil and gas sector. Analysts (correctly) predict this is the calm before the storm absent a price increase. While Kentucky has had its share of coal-related filings and closures, it has yet to see a significant oil and gas case. The similarities are striking, so DelCotto Law Group places its March Madness bets on one or more oil and gas cases in Kentucky before the end of 2015. As experienced coal counsel, we will know what to expect in this unique industry which has so many of the same issues as the coal sector.
BPZ Resources, Inc. filed on March 9 in the Southern District of Texas, Case No. 15-60016. The First Day Declaration noted the general “ industry downturn” as the most significant factor that made refinancing difficult if not impossible without a court process: “Our efforts to negotiate additional financing to fund business activities and pursue identified strategic alternatives were further impeded when oil prices plummeted and production growth faltered, creating additional obstacles to our restructure efforts.” Yes, no kidding.
Dune Energy and an affiliate filed on March 8 in the Western District of Texas, Case No. 15-10336. Its papers reflect that the senior secured lenders insisted on an immediate auction process, and “pre-bankruptcy marketing efforts” failed to produce any lead (i.e., acceptable) bid.
Dune’s filing also stated that its revenues had dropped in excess of 20% from $55.5 million in 2013 to $44 million in 2014. The First Day filings include a request for an immediate bidding and sale process. No waiting around for options in this case. Probably the right move….