TXCO Resources Inc., which has been struggling to remain afloat for months, on Monday filed for voluntary bankruptcy under Chapter 11. The filing, said the independent, was "precipitated by a series of events that led to a contraction" in liquidity.
CEO James Sigmon said in March that the company had run out of money and had pledged most of its assets to creditors (see Daily GPI, March 23).
TXCO's core operating area is the Maverick Basin in South Texas (see Daily GPI, April 7, 2008). It also operates in the onshore Gulf Coast region, in the Marfa Basin of Texas and in the Midcontinent region of Oklahoma.
"The company has continued to experience substantial difficulties in meeting short-term cash needs, particularly in relation to vendor commitments," the San Antonio-based independent said. "Extreme volatility in energy prices and a deteriorating global economy have created difficulties in the capital markets and have hindered TXCO's ability to raise debt and/or equity capital."
The company earlier this month fired CFO P. Mark Stark and COO James J. Bookout in an effort to reduce costs.
As part of the bankruptcy filing, TXCO said it filed several first-day motions with the U.S. Bankruptcy Court for the Western District of Texas to allow it to continue to conduct business without interruption. The motions primarily are designed to obtain post-bankruptcy financing and minimize the impact on the company's operations, customers and employees.
"During the reorganization process, suppliers should expect to be paid for post-petition purchases of goods and services in the ordinary course of business," TXCO said.
Through the bankruptcy court, TXCO is seeking approval of an anticipated debtor-in-possession financing with potential lenders of up to $32 million, with an initial $12.5 million available on an interim basis. However, TXCO said "there can be no assurance" that it would be able to obtain financing on the terms proposed "or at all."
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