Tulsa-based Unit Corp. has filed for Chapter 11 bankruptcy protection in Houston, joining a growing list of distressed Lower 48 operators battling low oil demand and prices.
Like many of its peers, Unit was struggling to keep its share price afloat even before Covid-19 ravaged global oil demand and prices.
The situation “has only worsened” with the pandemic, CEO David Merrill said on Friday. “While facing this challenging environment, we have worked diligently to explore a variety of strategic alternatives to cut costs, improve our liquidity and address near-term debt maturities.”
The Chapter 11 reorganization would reduce the company’s funded debt obligations by $650 million, the company said, adding that it has secured $36 million in debtor-in-possession financing from its lenders under the agreement.
The financing, combined with Unit’s regular cash flows, allow the company to keep paying its employees, vendors and suppliers. Unit said it does not foresee material disruptions to its vendors, customers or partners.
Unit said that its 50%-owned midstream affiliate Superior Pipeline Company LLC is not a debtor in the Chapter 11 cases and will be unaffected by the filing.
Through its subsidiaries, Unit operates in the exploration and production of oil and natural gas, the acquisition of oil and gas properties, the contract drilling of onshore wells and the gathering and processing of natural gas.
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