CHAPARRAL OIL COMPANY IS GOING BANKRUPT IN THE USA

Chaparral Energy Inc. Oil Company applied to the US court for a protection from bankruptcy. This will be the second bankruptcy of the company in recent years. If the reason for the first bankruptcy in 2016 was the collapse of the oil prices, then the situation in 2020 was additionally affected by the pandemic.

Experts note that the sharp increase in the number of bankruptcies in the energy sector is understandable because of the restrictions imposed by the authorities due to the spread of the infection. The restrictions stifle demand, prompting the lenders to cut the credit lines. Chaparral Energy has actually followed the path that California Resources and Chesapeake Energy have already had to go by.

“Despite the fact that we took carefully planned and decisive action to address the challenges of 2020, the overall impact of the pandemic on the energy industry, including our company, has been very serious,” said the company’s CEO Chuck Duginski.

“We intend to keep the company running smoothly and to fulfill all our trading commitments in time in accordance with the existing conditions,” he added.

Chaparral Energy Inc. located in Oklahoma City. The company is engaged in drilling and production of hydrocarbons nearby, in the area of ​​the town of Analarko. It is known that back in the spring of 2020, the lenders reduced the credit line for the company from $ 325 million to $ 175 million. At the same time, the company itself borrowed $ 250 million. The lack of funds forced the company to agree to pay the debts off in installments.

Experts note that the changes in lending conditions, as a rule, are not too significant. However, the situation with the collapse of the oil prices, which happened in the spring on the world market, led to the fact that many banks reduced their borrowing bases by an average of 23%. At the same time, in the situation with the Chaparral Energy Company, such a reduction was even greater, by 46%. According to some informed sources, this could be one of the reasons for the April resignation of Scott Pittman from the post of the chief financial officer of the company.

As a result, the company applied to the bankruptcy court located in Delaware.

The company plans to restructure its balance sheet and attract new investments. It is known that about 80% of the company's creditors have already supported the idea of ​​a $ 300 million equity swap of the unsecured bills. It is also planned to attract a mechanism at the expense of the company's reserves in the amount of $ 175 million, and to issue securities for $ 35 million.