Debt

Rattled shareholders of Chesapeake Energy Corp. headed for the exits Monday following a report, later denied by the company, that restructuring experts had been hired to assist with a bankruptcy filing.

Tulsa’s WPX Energy Inc. has added more natural gas and oil hedges to protect cash flows through 2017. About two-thirds of anticipated gas production in 2016 is hedged at $3.63/MMBtu. Close to 75% of its expected 2016 oil volumes, 29,380 b/d, are hedged at $60.85/bbl, including 2,000 b/d added since the end of September. For 2017, WPX has hedged 92,500 MMBtu of gas at $3.22 and 9,304 b/d of oil at $61.66. The onshore operator also has reduced its long-term debt by about 17% by repurchasing $68 million in notes of a $400 million maturity due in early 2017. The next debt maturity is in 2020. WPX said it “remains engaged in discussions with third parties” to sell its San Juan Basin gathering system and all or a portion of its Piceance Basin assets. The operator is scheduled to deliver its quarterly results on Feb. 25.

With the oil futures curve not forecasting a price rebound above $50/bbl until 2019, it may be a better play to pay down debt than invest in upstream development or acquisitions, Raymond James & Associates Inc. analysts said this week.

Houston-based Swift Energy Co., whose primary operations are in the Eagle Ford Shale and Louisiana, filed for voluntary bankruptcy protection in the waning hours of 2015, and has begun a restructuring process that includes turning over control of the company and selling assets.

The U.S. distressed debt ratio reached a peak for the year at 24.5% in December — its highest since the 2009 recession — and the oil and gas sector accounted for about 30% of the debt issuers, according to a report by Standard & Poor’s Ratings Services (S&P).

Persistently weak oil and natural gas prices, combined with OPEC’s decision last week to hold production steady, likely will reduce spending plans for many U.S. producers in 2016, but the debt-laden operators face even more pressure as they consider how to finance their go-forward plans.

With the oil and gas sector now accounting for 37% of total distressed debt, the U.S. distress ratio reached 20.1% in November, its highest level since September 2009, Standard & Poor’s Ratings Service (S&P) said in a report released Monday.

Thirty-six North American exploration and production (E&P) companies have filed for Chapter 11 bankruptcy protection to date this year and more are expected to file before the end of the year, according to a report by Haynes and Boone LLP.

California Resources Corp. (CRC), the year-old spinoff from Occidental Petroleum Corp. (Oxy), reported more losses for 3Q2015. Its CEO promised to complete the first of a series of asset sales to reduce debt by the end of this year, with more to follow.