Sanchez Energy Corp. on Monday cleared an early hurdle in its Chapter 11 bankruptcy after a federal court approved first day motions that allow the company to continue operating normally during the proceedings.

The U.S. Bankruptcy Court for the Southern District of Texas granted Sanchez interim approval to tap up to $50 million of the $175 million of debtor-in-possession (DIP) financing. The funds are to be combined with cash on hand and cash flow to keep the company running during the bankruptcy. The court must approve the remainder of the DIP financing.

Among other approvals, the court also authorized Sanchez to continue operating without interruption to its vendors, royalty interest owners and joint billing partners by allowing it to pay most pre-petition obligations. 

Sanchez, which focuses primarily on the Eagle Ford Shale of South Texas, filed for bankruptcy earlier this month. The company listed more than $2 billion of total debt in its filing. GSO Capital Partners LP is sponsoring the plan and would receive a percentage of equity.

Bankruptcies in the upstream sector are on the rise this year as commodity prices have fallen with little sign of a rebound anytime soon, according to Haynes and Boone LLP, which regularly tracks filings across the oil and gas industry.

Year-to-date 26 North American exploration and production companies have filed for bankruptcy, the law firm said last week, noting a sharp uptick since its May report. That compares with 28 total last year and 24 total in 2017.