Magnum Hunter Latest Oil Producer To Seek Bankruptcy

Dec 15 (Reuters) - Oil and gas producer Magnum Hunter Resources Corp and its affiliates filed for Chapter 11 bankruptcy protection on Tuesday to carry out a debt-cutting plan as a prolonged slump in oil prices has depleted the company's cash.
The company entered into a restructuring agreement that will convert its funded debt into equity, substantially reducing its more than $1 billion in debt, according to a company statement.
Magnum Hunter ranks among the biggest energy producers to file for bankruptcy this year, joining Samson Resources Corp, Sabine Oil & Gas Corp, Quicksilver Resources Inc and Energy & Exploration Partners Inc.
To fund its operations during its bankruptcy, the company's lenders agreed to provide up to $200 million in financing, which will also convert into equity when Magnum Hunter emerges from bankruptcy, according to the statement.
Magnum Hunter, which operates primarily in the Appalachian Basin in West Virginia and Ohio, said it expects to emerge from bankruptcy in April.
"With the unified support of our various lenders, we anticipate this restructuring will be a success and unprecedented in our industry," said Gary Evans, the company's chairman and chief executive officer, in the statement.
Evans noted in his statement that Magnum Hunter expects to become one of the first energy companies to find a quick path out of Chapter 11 bankruptcy.
Oil prices have plummeted to less than $40 per barrel from more than $100 a barrel 18 months ago. A large number of energy companies used high-yield debt to grow in recent years, but now investors are concerned that the debt may not be repaid, contributing to a recent sell-off in junk bonds.
Irving, Texas-based Magnum Hunter had about $1.1 billion in assets and $1.5 billion in debts, according to documents filed in the U.S. Bankruptcy Court in Wilmington, Delaware.
The company was among the first to completely halt fracking to save cash, joining a group of shale oil companies known as "zombies" because they lack the cash to drill new wells to find new sources of oil.
Magnum Hunter's shares, which trade over the counter, lost 40 percent of their value to trade around 2.5 cents each. Stock investors generally get nothing when a company files for bankruptcy.
(Reporting by Sneha Banerjee in Bengaluru and Tom Hals in Wilmington, Delaware; Editing by Anil D'Silva and Bill Rigby)
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- Weatherford CEO's Rebound Plan Relies On Getting Smaller
- Iran Says Oil Market Is Too Tight For US Zero Exports Target
- China's Squeezed 'Teapots' Eye Petchem Path To Riches
- Baker Hughes: US Drillers Add Oil Rigs For Second Week In Three
- Venezuela Hands China More Oil Presence, But No Mention Of New Funds
- Shell Looking for TikTok Expert
- Market Says Boo! To OPEC+
- Calgary Stampede Returns With Oil Boom Vibe
- Earthstone in $627MM Delaware Basin Deal
- Bureau Veritas Gets Services Deal On Shell UK Facilities
- Libya Crude Oil Exports Drop Sharply
- Major Licensing Rounds Coming Up In MSGBC Region
- TGS Begins First Multi-Client Offshore Wind Measurement Campaign
- Veolia Picks StaySafe For Solo Workers In Remote Locations
- Permian Highway Pipeline in Expansion Project FID
- USA Condemns Mortar Attacks on IKR Oil Infrastructure
- Sonatrach Makes Massive Gas Find In Sahara Desert
- Libya Says It May Suspend Oil Exports from Key Terminals
- Who Produced the Most Oil and Gas in 2021?
- G7 Weighs Russia Oil Price Cap
- Oil Prices Buck Recession Trend
- First-Ever 8th Gen Drilling Juggernaut Delivered To Transocean
- Exxon, Shell, CNOOC To Develop CCS Project In China
- More Oil Workers Being Trained to Operate in Permian
- Guinea-Conakry Hoping To Unlock O&G Potential With 22 Block Tender
- USA Navy and Iran Corps Clash in Strait of Hormuz
- Oil Industry Responds to Biden Letter
- Top Headlines: USA Navy and Iran Corps Clash in Strait of Hormuz and More
- Oil Nosedives on Fed Inflation Actions
- Top Headlines: Oil Industry Responds to Biden Letter and More
- Too Early To Speculate on ExxonMobil Refinery Fire Cause
- Fitch Solutions Reveals Latest Oil Price Forecast
- ExxonMobil Made More Money Than God This Year
- Russian Oil Disappears as Tankers Go Dark
- OPEC+ Set to Remove All Production Curbs in August