Shale driller Chaparral Energy files for bankruptcy due to pandemic

(Reuters) – Oklahoma shale driller Chaparral Energy Inc filed for Chapter 13 bankruptcy on Sunday, the latest casualty in the U.S. energy sector in recent months as COVID-19 crushes demand of oil.

The company’s assets and liabilities were between $ 500 billion and $ 1 billion, according to a case filed in U.S. bankruptcy court in Delaware. He had around $ 421 million in debt outstanding at the end of 2019.

Chaparral said he would restructure his balance sheet by balancing his $ 300 million unsecured debt and operate through the bankruptcy process with the help of $ 32 million in cash as of August 14 and operating cash flow. .

Lenders have limited credit to shale drillers, and Chaparral’s borrowing limit was recently reduced to $ 175 million from $ 325 million. Reuters reported in March that Chaparral was working with debt restructuring advisers to consolidate its cash position.

This is the second time the company has filed for bankruptcy. The last time was during the fall in oil prices in 2014-16, which it came out of in March 2017.

In a separate filing on Sunday, Chaparral debtors said they had started Chapter 11 cases to implement a “prepackaged reorganization plan.”

A trustee or examiner has not yet been requested and no committee has yet been appointed, according to the court record.

Chaparral had warned in May about its ability to continue operating amid a historic drop in commodity prices and said it had hired legal and financial advisers.

In recent months, large indebted shale independents such as Chesapeake Energy and Whiting Petroleum have succumbed to one of the oil industry’s worst crises. California Resources Corp also filed for Chapter 11 after defaulting on interest payments.

A drop in economic activity due to the pandemic and a price war between major oil producers Russia and Saudi Arabia pushed crude below $ 0 in April for the first time in the US. story.

Report by Kanishka Singh in Bengaluru; Editing by Shailesh Kuber and Arun Koyyur

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