Onshore independent Chaparral Energy Inc., whose primary exploration focus is the Mississippian Lime and Oklahoma’s stacked reservoirs, has filed for bankruptcy protection and is talking with creditors to reach an exchange agreement to reduce bondholder debt by about $1.2 billion.

In its Chapter 11 petition filed on Monday the Oklahoma City-based producer estimated liabilities of $1-10 billion (In re Chaparral Energy Inc., No. 16-11144, U.S. Bankruptcy Court, District of Delaware).

“The dramatic decrease in oil and natural gas prices over the last two years has presented numerous challenges for the industry as a whole,” CEO Mark Fischer said. “Chaparral continues to believe in the outstanding potential of our employees and our Midcontinent assets and EOR [enhanced oil recovery] programs.

“The continued depressed price environment, however, coupled with our existing debt levels, have severely limited the company’s overall operational ability. 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 and better position us for long-term success.”

To enhance liquidity, the producer in February borrowed nearly all of its remaining funds available under a 2010 credit agreement for $548 million. According to its petition, Chaparral’s biggest unsecured creditors include holders of $525.9 million in 7.625% senior notes due in 2022; $384 million in 8.25% senior notes due in 2021; and $298 million in 9.875% senior notes due in 2020.

Chaparral has filed a series of motions with the court that would enable the company to maintain its operations as usual, without interruption throughout the restructuring process. Included in the first day motions are requests to continue to pay employee wages, honor existing employee benefit programs and pay royalties to mineral owners.

The company has also filed motions seeking authority to pay expenses associated with production operations and drilling/completion activities, as well as costs associated with gathering, processing, transportation, marketing and those related to joint interest billing for nonoperated properties.

Founded in 1988, Chaparral works in the Mississippian and the Sooner Trend of the Anadarko Basin in Oklahoma, mostly in Canadian and Kingfisher counties, i.e. the STACK. It exited 2015 running three rigs all in the Midcontinent, and 90% of its capital spending last year was in the region (see Shale Daily, Nov. 16, 2015). The company is considered the third largest carbon dioxide EOR specialist based on active projects. Its North Burbank Unit in Osage County, OK, is the largest EOR unit in the state.