GMX Resources Inc. has filed for Chapter 11 bankruptcy protection, citing low natural-gas commodity prices and an inability to find funding.
GMX--an oil-and-gas exploration and production company with assets in the Williston Basin, East Texas Basin and Denver Julesburg Basin--filed its petition in the U.S. Bankruptcy Court for the Western District of Oklahoma.
In connection with the petition, GMX said it is pursuing an asset-purchase agreement with principal holders of its senior secured notes due 2017 to acquire substantially all of its operating assets and undeveloped acreage. GMX noted its joint venture, Endeavor Gathering LLC, in which it owns a 60% membership interest, isn't included in the filing.
Upon finalizing the potential asset-purchase agreement, the sale will be subject to a public auction and receipt of competing offers, the company said.
GMX noted natural-gas prices have remained low, and its oil-and-gas operations require ongoing additional capital expenditures for which it has "actively sought financing alternatives".
But it said it has been unsuccessful in finding a viable funding solution, and it believes bankruptcy protection will provide it with the ability to "meet its immediate financial needs to preserve the value of assets and to provide for the greatest recovery to its stakeholders."
GMX said it has obtained a commitment for debtor-in-possession financing from the principal senior secured noteholders, which will provide up to $50 million of additional financing to fund operating costs.
It added that upon approval by the bankruptcy court, the new financing and cash generated from ongoing operations will be used to support its business and efforts to sell its assets.
Copyright (c) 2012 Dow Jones & Company, Inc.
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