(Bloomberg) – Goodrich Petroleum Corp., the latest casualty of the energy slump, sought bankruptcy protection with a plan to eliminate about $400 million of debt.
The Chapter 11 petition filed in Houston Friday listed $507 million in debts, compared with only $99 million in assets. Goodrich said in an accompanying statement that it intends to keep operating under court protection with existing management in place.
The restructuring support agreement will “substantially de-leverage its capital structure and strategically position the company for long-term performance in an anticipated improving commodity price environment,” Houston-based Goodrich said in the statement.
The company is the latest to succumb to the epidemic of defaults sweeping its industry during the biggest price slump in a generation. Energy XXI Ltd., a U.S. oil and gas explorer, filed for bankruptcy Thursday after spending $5 billion on acquisitions. Oil has rebounded after falling to 12-year lows, but is still trading close to $40 a barrel, well below the $100 it was fetching before the onset of the slump in mid-2014.
On March 16, Goodrich delayed releasing its annual report, citing a large loss that auditors have determined might affect the company’s ability to operate as a going concern. The loss came “mainly as a result of substantial impaired asset writedowns,” Goodrich said in the filing.
Goodrich turned to the bankruptcy process after a debt-for-equity exchange offer failed to gain enough traction among stockholders and unsecured debt holders.
Since the start of 2015, about 50 oil and gas producers have gone bankrupt, owing more than $17 billion, according to law firm Haynes & Boone LLP. Goodrich joins shale-focused companies such as Magnum Hunter Resources Corp., which filed for creditor protection in December.
Goodrich’s largest unsecured creditors include holders of seven different groups of bonds, according to the court filing. Among them is a $116.8 million claim on 8.875 percent senior notes due in 2019.
The support agreement will eliminate all the company’s pre-bankruptcy debt save a first-lien loan that has $40 million outstanding, according to Friday’s statement. Goodrich said it expects to maintain sufficient liquidity to continue operations during the restructuring.
Goodrich has properties in the Tuscaloosa Marine shale of eastern Louisiana and southwestern Mississippi, the Eagle Ford shale in south Texas and the Haynesville shale in northeast Texas and northwest Louisiana, according to its website.
The case is Goodrich Petroleum Corp., 16-31975, U.S. Bankruptcy Court, Southern District of Texas (Houston).
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