Houston-based operators Oasis Petroleum Inc., a Lower 48 explorer, and oilfield services (OFS) giant Superior Energy Services on Wednesday filed for voluntary bankruptcy protection to restructure and shrink their considerable debt loads.

Oasis, whose exploration and production operations are focused on the Permian and Williston basins, sought voluntary Chapter 11 protection in U.S. Bankruptcy Court for the Southern District of Texas to reduce debt by an estimated $1.8 billion. 

The list of U.S. explorers and OFS operators has grown substantially since the spring.

CEO Thomas B. Nusz said “historically low global energy demand and commodity prices” had led management to “take decisive action to strengthen our liquidity and overcome the headwinds now challenging both our company and industry. We are confident that we are taking the right steps to position the business for long-term success. 

“We remain committed to the highest standards as it relates to environmental stewardship, safety and operational excellence. We expect to continue our operations as normal and intend to meet our obligations to vendors, and to continue making payments to royalty owners, working interest owners and surface owners on a go-forward basis.”

A prepackaged restructuring support agreement (RSA) was reached to emerge from Chapter 11 in November. Master limited partnership (MLP) Oasis Midstream Partners and all subsidiaries in which it owns an equity interest were not included in the Chapter 11 proceedings.

The upstream and MLP operations should continue as normal, management said.

In connection with the RSA and subject to court approval, Oasis has a $450 million commitment for debtor-in-possession financing from its existing lenders. In addition, the company has a commitment letter to exit with a revolving credit facility of up to $575 million.

Tudor, Pickering, Holt & Co. and Perella Weinberg Partners are acting as financial advisers to Oasis, with Kirkland & Ellis LLP as legal adviser and AlixPartners LLP the restructuring adviser.

Meanwhile, Superior also has a pre-packaged RSA to convert $1.3 billion of funded debt into equity. It also is contemplating separating its operations into two separate businesses.

The proposed recapitalization would deleverage 100% of the long-term debt and related interest costs, provide access to additional financing and establish a capital structure to “thrive in a low commodity price environment,” management said. Completion of the restructuring, also underway in the bankruptcy court in Houston, is expected by year’s end.

“The Superior team and our many partners have worked tirelessly to lessen the impacts of external challenges on the company in recent months,” CEO David Dunlap said. “We do not anticipate any operational interruptions as a result of this announcement, and we feel that our ‘fortress’ balance sheet and strategic positioning following the restructuring will allow us to continue to provide the same quality of high-end products and services to our customers.”

If it were to separate the businesses, “the U.S. onshore businesses, including service rigs, coiled tubing, wireline, pressure control, flowback, fluid management, accommodations and discontinued pressure pumping assets, would become a new consolidation platform” for the assets.

The globally diversified service lines, dubbed RemainCo, “would remain with Superior, including premium drillpipe rentals, bottom hole assemblies, completion tools and products, hydraulic workover, snubbing and production services, and well control services.”

Otherwise, if Superior remains consolidated, senior noteholders would receive 98% of the equity when the restructuring is completed, while existing shareholders would receive 2% of the equity, management said. 

Ducera Partners and Johnson Rice & Co. are acting as financial advisers, while Latham & Watkins LLP is legal counsel, and Alvarez & Marsal is restructuring adviser.