Oklahoma oil and gas producer Chaparral Energy Inc on Sunday filed for Chapter 11 bankruptcy protection, the latest US energy sector casualty in the past few months, as weak oil prices due to the COVID-19 pandemic result in a cash crunch.
The company’s assets and liabilities were in the range of US$500 million to US$1 billion, according to a court filing in the US Bankruptcy Court for the District of Delaware.
Lenders have been reining in on credit for shale drillers and Chaparral’s borrowing limit had been reduced to US$175 million from US$325 million.
Reports in March said the driller was working with debt restructuring advisers to shore up its cash position.
This is the second time the company has filed for bankruptcy protection. The last time was during the oil price slump from 2014 to 2016, from which it emerged in March 2017.
In a separate filing on Sunday, the company’s debtors said they started the Chapter 11 cases to implement a “prepackaged plan of reorganization.”
A trustee or examiner has not yet been requested and no committees have been appointed yet in the Chapter 11 cases, the court filing said.
Chaparral had in May warned of its ability to continue as a going concern amid a historic plunge in commodity prices and said it had hired legal and financial advisers.
In the past few months, debt-laden major shale independents such as Chesapeake Energy Corp and Whiting Petroleum Corp have succumbed to one of the worst crises that the oil industry has faced.
California Resources Corp also filed for Chapter 11 after defaulting on interest payments.
A fall in economic activity due to the pandemic and a price dispute between top oil producers Russia and Saudi Arabia had resulted in crude dropping below US$0 in April for the first time in history.
Oklahoma City-based Chaparral had around US$421 million of debt outstanding at the end of last year.
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