Midstates Petroleum, Ultra File for Bankruptcy Amid Weak Oil Price
May 2(Reuters) - Oil-and-gas producers Midstates Petroleum Co Inc and Ultra Petroleum Corp have filed for Chapter 11 bankruptcy protection, joining several companies that have been unable to meet debt obligations after a steep decline in energy prices.
Oklahoma-based Midstates and Houston-based Ultra have a combined $5.8 billion in debt, according to court documents filed in Houston's U.S. Bankruptcy Court over the weekend.
The two join dozens of U.S. oil and gas producers that have filed for bankruptcy since the start of 2015. After years of using junk bonds to fuel a frenzy of shale drilling, energy prices began to decline in late 2014 and left many exploration and production companie unable to service their obligations.
Both companies entered bankruptcy as banks are conducting regular six-month reviews of their lending to energy producers. There are signs that banks may take a tougher line this spring, deepening the financial crisis for many producers.
Midstates said it had reached agreements with significant groups of creditors to cuts its $2 billion of debt by more than $1.8 billion.
Ultra said in court filings it planned to engage creditors to reduce $3.8 billion in debt, all of which is unsecured.
Midstates went public in 2012, raising nearly $500 million. Its shares were down 34 percent at about 19 cents in early over-the-counter trading. Its stock was trading at more than $70 per share when energy prices began to fall in 2014.
Shares of Ultra were halted at 31 cents.
Ultra produced 290 billion cubic feet of natural gas in 2015, and operates in Wyoming, Utah and Pennsylvania. Midstates operates in Texas, Louisiana and Oklahoma and produced 12 million barrels of oil equivalent in 2015.
Despite the pace of energy-producer bankruptcies, to date there has been little impact on U.S. energy production, undercutting some analysts' expectations for a sudden output decline.
Some producers that entered bankruptcy are beginning to emerge, but even those that eliminated all of their debt may struggle to grow again.
(Reporting by Tom Hals and Tracy Rucinski in Chicago; Editing by Bernadette Baum)
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