HOUSTON (Bloomberg) — Goodrich Petroleum Corp. filed for Chapter 11 in a U.S. bankruptcy court to implement a financial reorganization after struggling to restructure its debt amid declining energy prices.
“Through the Chapter 11 restructuring, the company will eliminate approximately $400 million in debt from its balance sheet, substantially de-leverage its capital structure and strategically position the company for long-term performance in an anticipated improving commodity price environment,” Houston-based Goodrich said in a statement on Friday.
Goodrich earlier this month reached an agreement with creditors to use its “best efforts” to file for Chapter 11 with a prepackaged plan to reorganize and emerge from court as an operating business. That agreement came after the company’s debt-for-equity exchange offer failed to gain enough traction among debt holders.
The company is the latest to succumb to the epidemic of defaults sweeping its industry during the biggest price slump in a generation. A shale boom driven by new hydraulic fracturing techniques led many companies to take on high-yield debt. Now they’re suffering the consequences. Energy XXI Ltd., a U.S. oil and gas explorer, filed for bankruptcy protection on Thursday after spending $5 billion on acquisitions in the years leading up to the crude slump.
On March 16, Goodrich delayed releasing its annual report, citing a large loss that auditors have determined may affect the company’s ability to operate as a going concern. The loss comes “mainly as a result of substantial impaired asset writedowns,” Goodrich said in the filing.
Goodrich expects to maintain sufficient liquidity to continue its operations and support the business during the financial restructuring process, the company said on Friday.
Goodrich has properties in the Tuscaloosa Marine shale of eastern Louisiana and southwestern Mississippi, the Eagle Ford shale in south Texas and the Haynesville shale in northeast Texas and northwest Louisiana, according to its website. Low gas prices have led it to focus on leasing its existing acreage, according to the website.
Since the start of 2015, about 50 oil and gas producers have gone bankrupt, owing more than $17 billion, according to law firm Haynes & Boone LLP. Goodrich joins shale-focused companies, such as Magnum Hunter Resources Corp., which filed for creditor protection in December.