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North American E&Ps in Bankruptcy Carry Estimated $13B in Debt, Firm Says

Thirty-six North American exploration and production (E&P) companies have filed for Chapter 11 bankruptcy protection to date this year and more are expected to file before the end of the year, according to a report by Haynes and Boone LLP.

The 36 E&Ps have more than $13 billion in cumulative secured and unsecured debt, the law firm said in the latest version of its "Oil Patch Bankruptcy Monitor.” The firm warned that sources in the industry and other economic factors indicate that more E&Ps will file for bankruptcy before New Year’s Day.

"With the slump in commodity prices persisting into this fall, [our] energy and bankruptcy practice groups are closely following recent industry developments," the firm said, adding that "for some companies, the impact [falling commodity prices has had on borrowing bases] is severe enough to consider bankruptcy."

According to Haynes and Boone, the bankruptcy filings by North American E&Ps so far this year include $6.95 billion in secured debt and $6.08 billion in unsecured debt, for a total of $13.03 billion.

In terms of secured debt, Tulsa-based Samson Resources Corp. topped the list with $1.95 billion. It filed for Chapter 11 bankruptcy protection on Sept. 16 (see Shale DailySept. 17). Houston-based Sabine Oil & Gas was second on the list ($1.66 billion) after filing on July 15 (see Shale DailyJuly 15), followed by Fort Worth, TX-based Quicksilver Resources Inc. ($1.1 billion) on March 17 (see Shale DailyMarch 18). The fourth-highest E&P for secured debt was Houston-based Milagro Oil & Gas Inc., which reported $417.5 million in debt (see Shale DailyJuly 16).

In order, the top four E&Ps on the unsecured debt list were Samson ($2.38 billion), Sabine ($1.2 billion), Quicksilver ($976 million) and Milagro ($655 million). Samson topped the list in total debt at $4.33 billion, followed by Sabine ($2.86 billion), Quicksilver ($2.07 billion) and Milagro ($1.07 billion).

Denver-based Escalera Resources Co. was the most recent E&P to file for bankruptcy after it filed earlier this month in U.S. Bankruptcy Court for the District of Colorado. Last April, the company said its borrowing base was negatively impacted by low commodity prices (see Shale DailyApril 15).

Of the 36 filings on the firm's list, 16 were filed in federal bankruptcy court in Texas, while six were filed in Canada. Four were filed in both Colorado and Delaware, followed by Louisiana with three. Another three states -- Alaska, Massachusetts and New York -- each had one filing.

The bulk (61%) of the secured and unsecured debt, $7.96 billion, is tied up in court in Delaware. New York holds the second-largest (22%) portion of the debt at $2.86 billion, followed by Texas (8.8%) at $1.15 billion. Collectively, Delaware, New York and Texas hold 91.8% of the debt. Meanwhile, Canada holds $351.7 million, followed by Colorado ($248.14 million), Louisiana ($229.72 million), Alaska ($215.55 million) and Massachusetts ($3.58 million).

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