Bonanza Creek, Other U.S. Energy Firms Announce Chapter 11 Plans
Dec 23 (Reuters) - Bonanza Creek Energy Inc and two other energy firms announced on Friday plans to file for bankruptcy in coming weeks, joining a long list of U.S. energy companies that have succumbed to a drop in oil prices.
Oil and gas producers Bonanza Creek and Memorial Production Partners LP and oilfield services provider Forbes Energy Services Ltd each said they had a plan to reduce debt and transfer ownership to creditors.
Global oil prices have fallen more than 50 percent since mid-2014, eroding cash flows of oil producers and crimping their ability to meet debt and interest payments.
As of Dec. 14, 114 oil and gas producers had filed for bankruptcy in 2016 with $57 billion in total debt, more than double the number of filings in 2015, according to Haynes & Boone, a law firm that specializes in energy restructuring.
Among companies like Forbes that provide well-site services to energy exploration firms, 110 had filed for Chapter 11 protection with $17 billion of debt as of Dec. 14, also more than double the 2015 number, according to Haynes & Boone.
Looking ahead to next year, restructuring advisers said they expect more energy-related bankruptcy filings, as the sector prepares for an upturn that could follow implementation of President-elect Donald Trump's pro-drilling agenda or OPEC's plan to cut oil production for the first time in eight years.
Denver-based Bonanza Creek, with oil and natural gas assets in Colorado and Arkansas, said it would file for bankruptcy on or before Jan. 5 with a plan to eliminate $850 million in debt and provide $200 million in new equity.
The company said it expects to exit bankruptcy in the first quarter of 2017. Bonanza Creek's shares slid 55 percent to $0.88 in morning trade.
Memorial Production, with oil and gas assets in Texas, Louisiana, Colorado and California, said it would file for Chapter 11 in coming weeks with a plan to eliminate $1.3 billion of debt. Its shares were down 55 percent to $0.18.
Meanwhile, Forbes Energy said it had reached a prepackaged plan with lenders and would file for bankruptcy in Houston on or before Jan. 23, 2017. Its shares lost 6.3 percent to $0.04 in over-the-counter trading on Friday.
Earlier this month, Stone Energy Corp filed for Chapter 11 bankruptcy and said it would eliminate about $1.2 billion in debt by transferring control of the company to its noteholders.
(Reporting by Tracy Rucinski in Chicago and Ahmed Farhatha in Bengaluru; Editing by Ted Kerr and Phil Berlowitz)
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