The downturn having taken its toll, two more exploration and production (E&P) companies -- Memorial Production Partners LP and Bonanza Creek Energy Inc. -- have announced plans to restructure and seek bankruptcy protection.
The Houston-based Memorial said Friday it has reached an agreement with lenders to reduce its overall debts by more than $1.3 billion, including the cancellation of more than $1.1 billion of principal in outstanding notes.
Memorial said it plans to file Chapter 11 bankruptcy proceedings in the next few weeks. The complete terms of its restructuring agreement will be disclosed in a Form 8-K filing with the Securities and Exchange Commission, the partnership said.
The restructuring “highlights the next step in our efforts to reduce debt and position the Partnership for the long term,” CEO William Scarff said. “After thoroughly considering all options with the assistance of our legal and financial advisers, and in light of the challenging commodity pricing environment and the recent reduction of our borrowing base, we believe that this course of action is in the best interests of” the company.
“...Moving forward, we are focused on maintaining production across our high-quality asset base and executing on our strategic priorities. Our employees are the backbone of our success, and it is because of their hard work and commitment to working safely that we continue to achieve solid operational results. We thank them for their continued dedication,” he added.
Denver-based Bonanza Creek on Friday said it has an agreement with lenders that would eliminate over $850 million in debt. The company said the agreement also includes a $200 million equity rights offering supported by certain lenders that would generate additional liquidity.
Bonanza said it plans to file Chapter 11 proceedings in court by Jan. 5 and hopes to emerge from bankruptcy by the end of the first quarter.
The agreement “further increases our competitive position with significant improvements in firm transportation commitments, a comprehensive elimination of more than $850 million in unsecured balance sheet principal, accrued interest, and prepayment premiums, and a concurrent injection of $200 million in equity to fund our go-forward development plan,” CEO Richard Carty said. “...This represents the culmination of countless hours of hard work from various parties to resolve legacy encumbrances that restricted our access to liquidity and constrained asset development.”
He added, “We look forward to completing the restructuring quickly with minimal disruption to our business, and to repositioning our company as a galvanized operator with an expectation to emerge with no debt and a strengthened liquidity position to execute upon our extensive asset development opportunities.”
Memorial’s development focuses on mature, legacy oil and natural gas properties, and the partnership holds assets in South Texas, East Texas/Louisiana, the Rockies and offshore California.
Bonanza Creek’s assets are focused in the Niobrara and Codell formations in the Rockies and in the oily Cotton Valley sands in southern Arkansas.