Low crude oil prices have compelled Emerald Oil Inc., an independent exploration and production (E&P) company focused exclusively in the Williston Basin, to voluntarily file for bankruptcy protection and consider a possible sale.

The Denver-based company said Wednesday it had obtained $20 million in post-petition debtor in possession (DIP) financing. If approved by the bankruptcy court, the DIP financing would allow the company to continue operating during the Chapter 11 process.

Before the company filed for Chapter 11, Emerald also executed a nonbinding term sheet with Latium Enterprises Inc. for all of its assets, in a “stalking horse” sales process subject to lender and court approval. Latium would be the high bidder at an auction, which could be held before July.

“The plan we are announcing…will provide for continuity in Emerald’s current and future business operations,” CEO McAndrew Rudisill said. “This process is the only path going forward and should enable the business to execute a turnaround in the current low oil price environment. Importantly, Emerald’s plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for company stakeholders.”

According to an affidavit filed in U.S. Bankruptcy Court for the District of Delaware, CFO Ryan Smith said that as of Dec. 31, 2015, Emerald had about $291 million in total assets, with $28 million in current assets, and $337 million in total liabilities. As of the petition date Wednesday, the principal amount of the consolidated funded debt obligations totaled about $260.5 million, which included $111 million of obligations under its credit facility and $148.5 million in convertible notes.

Emerald has “fallen victim to the same macroeconomic forces affecting the rest of the oil and natural gas industry, namely historically low commodity prices coupled with the global decline in oil demand growth projections,” Smith said.

Smith said that as of March 15, Emerald held close to 128,000 gross (76,000 net) acres of leasehold in the Williston Basin across North Dakota’s Billings, Dunn, McKenzie and Stark counties. The company primarily is focused on oil targets in the Middle Bakken Shale, Three Forks and the Pronghorn Sand formation.

In February, said Smith, Emerald held 54,000 net acres in the Low Rider area of McKenzie County; 20,000 net acres in the Lewis & Clark area of McKenzie County; and 2,000 net acres in the Pronghorn, in Billings and Stark counties. All of the acreage is operated. Emerald had an estimated 14 million bbl of proved developed oil reserves and 11 Bcf of proved developed natural gas reserves at the end of 2015.

Beginning in late 2014 and through 2015, the company “understood the potential for future prices to remain at…low levels for an extended period of time,” Smith said, and subsequently it reduced its development program for 2015, releasing two of its three contracted rigs. Although drilling and completion costs fell about 30% in the wake of low oil prices, the company has shed about 40% of its workforce since the beginning of 2015.

Last July, Emerald sold a 30% working interest on 25,000 undeveloped net acres in McKenzie County and about 4,400 undeveloped net acres in Richland County, MT, to Koch Exploration Co. LLC, a subsidiary of Koch Industries Inc., for $17.4 million. Koch also reimbursed Emerald $5.4 million for its share of drilled and uncompleted wells in McKenzie County, for a total deal valued at $20 million. The transaction closed in October, with the proceeds used to pay down the credit facility.

In a separate deal, Emerald sold about 9,750 net acres of oil and gas leases, with associated production of 375 boe/d, to Angelus Private Equity Group for an aggregate $9.75 million last December. The deal closed in January, with proceeds from the sale also going to pay down the credit facility.

Smith said subsequent attempts to address liquidity with several undisclosed third parties — including negotiations for a $75 million senior secured second lien term loan facility; a $175 million refinancing agreement; and a $30 million private offering of convertible notes — failed in 2015, and a term sheet executed on March 16 proposing to assign the credit facility from the lenders to another third party was never consummated.