Pacific Energy Resources Files Chapter 11
Pacific Energy Resources Ltd. announced that it and its wholly owned subsidiaries have filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
The filing was precipitated by the dramatic decrease in the market price of oil over the past five months. Combined with the Company's pre-existing level of debt related to past acquisitions and poor capital market conditions, the Company's liquidity and cash flow is insufficient to operate its business and invest in its oil producing assets to increase production. Faced with these constraints, the Company and its subsidiaries filed petitions for reorganization under chapter 11 to facilitate access to an immediate source of liquidity as it works to restructure its debt.
In connection with the filing, the Company is seeking customary authority from the Bankruptcy Court that will enable it to continue operating its business in the ordinary course of business. The requested approvals include requests for the authority to make wage and salary payments and continue various benefits for employees. In addition, the Company has negotiated a commitment for $40 million in debtor-in-possession ("DIP") financing. The DIP facility wraps and replaces two of the Company's three asset-based credit facilities and is being provided by the lenders of the two credit facilities that are being replaced. Upon Court approval, the DIP financing combined with the Company's operating revenue will provide sufficient liquidity to fund working capital, meet ongoing obligations and ensure that normal operations continue without interruption during its restructuring.
Pacific Energy Resources Ltd. is an oil and gas exploration and production company based in Long Beach, California, U.S.A.
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