Re: Good News About Oil Company Bankruptcies
Posted: Thu 13 Jul 2017, 19:42:48
Chapter 11 bankruptcy filings...the big picture:
Top 10 Bankruptcies of 2016
With one exception, the Top 10 List of "public company" bankruptcies of 2016 consisted entirely of energy companies—solar, coal, and oil and gas producers. The exception came from the airline industry. Half of the companies on the Top 10 List filed prepackaged or prenegotiated chapter 11 cases.
Solar-energy company SunEdison pulledvnto the No. 1 spot on April 21, 2016, with $11.5 billion in assets and more than $8 billion in debt. SunEdison borrowed heavily in recent years to acquire wind and solar developers
The #2 the largest U.S. coal mining company, Peabody with with $11 billion in assets and $10.1 billion in debt.
Houston based oil and gas producer LINN Energy won the #3 spot. after reaching the broad terms of a deal with the majority of its lenders to restructure $8.3 billion in debt and obtain $2.2 billion in fresh financing. Interesting that it emerged from bankruptcy as two separate private companies. It plans sell nearly 250,000 net acres of assets, including 130,000 acres in South Texas and 90,000 acres in the Permian Basin. Another 20,000 acres on the sales block are in North Dakota.
Arch Coal collapsed into the #4. It's second-largest coal miner in the U.S. The plan provides for a debt-for-equity swap that cut Arch Coal’s debt load by 93%.
Breitburn Energy Partners LP drilled into the #5 spot.
Energy XXI trickled into the #6 spot. It implemented a Chapter 11 plan that would eliminate substantially all of its debt by means of a debt-for-equity swap.
Republic Airways taxied into the #7 position. Key features of its Chapter 11 plan includes reinstatement of its secured debt, distributions of cash and stock to unsecured creditors, and the extinguishment of old equity.
Halcón drilled its way into the #8 position. It implemented an agreement that would eliminate $1.8 billion in debt and $222 million in preferred stock by means of a debt-for-equity swap. By doing so it earned a $600 million credit line based upon its proven reserves.
The No. 9 spot was the offshore drilling rig operator Paragon Offshore. It implemented a plan that reduced its debt by approximately $1.1 billion. The Chapter 11 plan offered bondholders cash and equity in the reorganized company and allowed existing equity holders to retain a 65 percent stake in the company.
SandRidge trickled into the final spot on the Top 10 List for 2016. It implemented a Chapter 11 plan for a $3.7 billion debt-for-equity swap.
Notice a couple of things. First, how few of the well known big shale players are on the list. Second, though the process was painful for some of the creditors and shareholders, most of the companies emerged from bankruptcy not only intact but it fairly good financial. Compare that to the nearly hysterical early reports posted here that all the bankruptcy filings represented an early obituary for the US oil patch. That silly spin ignored the huge benefits corporations gain by filing Chapter 11 bankruptcy. In a number of cases the original company owners were almost total flushed and replaced by the creditors. But the corporation itself came out of the process in a much improved financial condition.
Top 10 Bankruptcies of 2016
With one exception, the Top 10 List of "public company" bankruptcies of 2016 consisted entirely of energy companies—solar, coal, and oil and gas producers. The exception came from the airline industry. Half of the companies on the Top 10 List filed prepackaged or prenegotiated chapter 11 cases.
Solar-energy company SunEdison pulledvnto the No. 1 spot on April 21, 2016, with $11.5 billion in assets and more than $8 billion in debt. SunEdison borrowed heavily in recent years to acquire wind and solar developers
The #2 the largest U.S. coal mining company, Peabody with with $11 billion in assets and $10.1 billion in debt.
Houston based oil and gas producer LINN Energy won the #3 spot. after reaching the broad terms of a deal with the majority of its lenders to restructure $8.3 billion in debt and obtain $2.2 billion in fresh financing. Interesting that it emerged from bankruptcy as two separate private companies. It plans sell nearly 250,000 net acres of assets, including 130,000 acres in South Texas and 90,000 acres in the Permian Basin. Another 20,000 acres on the sales block are in North Dakota.
Arch Coal collapsed into the #4. It's second-largest coal miner in the U.S. The plan provides for a debt-for-equity swap that cut Arch Coal’s debt load by 93%.
Breitburn Energy Partners LP drilled into the #5 spot.
Energy XXI trickled into the #6 spot. It implemented a Chapter 11 plan that would eliminate substantially all of its debt by means of a debt-for-equity swap.
Republic Airways taxied into the #7 position. Key features of its Chapter 11 plan includes reinstatement of its secured debt, distributions of cash and stock to unsecured creditors, and the extinguishment of old equity.
Halcón drilled its way into the #8 position. It implemented an agreement that would eliminate $1.8 billion in debt and $222 million in preferred stock by means of a debt-for-equity swap. By doing so it earned a $600 million credit line based upon its proven reserves.
The No. 9 spot was the offshore drilling rig operator Paragon Offshore. It implemented a plan that reduced its debt by approximately $1.1 billion. The Chapter 11 plan offered bondholders cash and equity in the reorganized company and allowed existing equity holders to retain a 65 percent stake in the company.
SandRidge trickled into the final spot on the Top 10 List for 2016. It implemented a Chapter 11 plan for a $3.7 billion debt-for-equity swap.
Notice a couple of things. First, how few of the well known big shale players are on the list. Second, though the process was painful for some of the creditors and shareholders, most of the companies emerged from bankruptcy not only intact but it fairly good financial. Compare that to the nearly hysterical early reports posted here that all the bankruptcy filings represented an early obituary for the US oil patch. That silly spin ignored the huge benefits corporations gain by filing Chapter 11 bankruptcy. In a number of cases the original company owners were almost total flushed and replaced by the creditors. But the corporation itself came out of the process in a much improved financial condition.