Chaparral Files for Bankruptcy to Cut $1.2 Billion in Debt

  • Oklahoma driller says it's still in talks on debt-equity swap
  • Roster of 2016 bankruptcies is dominated by energy companies

Chaparral Energy Inc. filed for bankruptcy protection as it continues talks with creditors to reach an exchange agreement that would cut bondholder debt by about $1.2 billion.

The Oklahoma City-based oil and gas explorer listed estimated liabilities of $1 billion to $10 billion in a Chapter 11 petition filed Monday in Delaware federal court and blamed its bankruptcy on the commodity slump that’s plagued the energy industry since oil started its slide in 2014.

“By significantly reducing our debt and restructuring our balance sheet, Chaparral will be better positioned to not only weather this down environment, but also increase our long-term financial security,” Chief Executive Officer Mark Fischer said in a statement. Chaparral said it plans to continue operating for the duration of the reorganization while it continues to negotiate a debt-for-equity swap.

In February, to build liquidity, the company borrowed substantially all of the remaining funds available under $548 million credit agreement from 2010. It also retained Latham & Watkins LLP and Evercore to advise it on financial and strategic alternatives.

Oil Slide

Dozens of energy-linked businesses, including drillers and service providers, have sought creditor protection since crude began its slide in mid-2014, according to law firm Haynes & Boone LLP. In the past year alone, 13 oil and gas companies have filed for bankruptcy protection in the U.S. listing liabilities of more than $1 billion each, according to data compiled by Bloomberg.

According to its court filing, Chaparral’s biggest unsecured creditors include holders of $525.9 million in 7.625 percent 2022 senior notes; $384 million in 8.25 percent senior notes due in 2021; and $298 million in 9.875 percent 2020 senior notes.

The case is In re Chaparral Energy Inc., 16-11144, U.S. Bankruptcy Court, District of Delaware.

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