HOUSTON, TEXAS – Two Houston-based drilling companies filed for Chapter 11 bankruptcy protection within a 24-hour period ending Friday as the oil slump continues to take its toll on the sector at large. The firms plan to shed a combined $3.2 billion in debts to their creditors.
Energy XXI Ltd. (NASDAQ: EXXI) announced the company and its impacted subsidiaries’ intent to eliminate roughly $2.8 billion-worth of debts from the balance sheet, nearly all money owed prior to the filing except for its “first lien reserve” or revolving credit line of $377 million, according to court documents obtained by Breitbart Texas. The company claims up to $100 million dollars in assets as of the time of petition. Energy XXI lists 26 subsidiaries as affiliate entities affected. A Thursday press release notes that President and Chief Executive Officer John Schiller will stay on in his current capacities and retain a board seat.
“We are confident that we are taking the right steps to provide Energy XXI a solid foundation,” Schiller said in a statement. “Our production is on track as we continue to focus our operations on low-risk, high-return projects.”
Energy XXI “believes it has sufficient liquidity”, claiming $180 million in cash on hand as of March 31.
On a relatively smaller scale, Goodrich Petroleum Corporation (GDPM) and its limited liability corporation subsidiary’s restructuring package sheds $400 million in debts with up to $100 million in assets on the balance sheet, according to court records filed Friday. CEO Robert C. Turnham Jr. and the rest of the executive management team are expected to remain in place to ensure a smooth transition, according to an online statement.
Neither company has claimed or had similar bankruptcy cases filed against them in the past eight years until now.
The independent Texas oil drillers together claim exploration successes in some of the highest-valued areas of the southern United States. Energy XXI operated primarily on the Gulf of Mexico Shelf, sometimes in partnership with ExxonMobil (NYSE: XOM). The company’s “acquire and exploit” strategy would help them to discover the Davy Jones ultra-deep well in 2010. Goodrich, on the other hand, claims working interests to 260 producing oil and gas wells in eight states. Most common areas of operation have been the Eagle Ford, Tuscaloosa Marine and Haynesville Shales.
Since January 2015, 50 oil and gas producers have filed for bankruptcy protection as the price per barrel continues to lag below its pre-2014 highs, according to the Houston Chronicle. Drillers are not the only types in the sector to be showing signs of pain, however. Breitbart Texas previously reported that brand-name companies like Chevron (NYSE: CVX) have been forced to lay off thousands of employees. Further, oilfield services companies Halliburton (NYSE: HAL) and Baker Hughes’ (NYSE: BHI) proposed merger faces new uncertainties after the U.S. Department of Justice filed an antitrust lawsuit on April 6. More payroll reductions and bankruptcies are likely to follow.
Both Energy XXI and Goodrich Petroleum’s Chapter 11 filings are being handled by Houston-based attorney Bradley R. Foxman of Vinson & Elkins LLP. The cases were filed in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
Logan Churchwell is a founding member of the Breitbart Texas team. You can follow him on Twitter @LCChurchwell.
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