EXTRACTION OIL & GAS COMPANY FILES FOR BANKRUPTCY

A North American company with the self-explanatory name Oil&Gas Extraction voluntarily filed for bankruptcy in the Delaware County court. The company hopes that an appeal to chapter 11 of the Bankruptcy Code of the US will improve the company’s market position in the future. The formal reason, as it was noted in the documents, was a 30% drop in shares at the preliminary exchange tenders.

The experts noted that the company chose a good moment for procedures related to the restructuring of its debt obligations. The representatives of the company stated that it managed to get a dedicated credit line of $ 125 million. The company's management managed to attract $ 50 million of completely new investments, $ 15 million of which could immediately go to the bankruptcy court. The remaining $ 75 million the company receives under a revolving loan.

As it was noted by the Oil&Gas Extraction CEO Matt Owens, the financing provided would let the company to provide sufficient liquidity when carrying out the procedures, provided for by the bankruptcy law, and minimize possible disruptions.

The main task that the company poses as a goal of the impending bankruptcy is to reach a consensus on the structure of the restructuring plan entire capital.

It includes, in particular, a significant reduction in the share of the borrowed funds, which the company wants to achieve by exchanging debts for the shares. Considering that the company's shares have fallen by 70% since the beginning of the year and show a tendency to a further decline, this opportunity may turn out to be attractive for purchasing securities at a lower price. The average stock price is now trading at $ 0.6.

The experts note that the company knows how to wait for a successful moment. A few years ago, in October 2016, it managed to raise about $ 633 million during the IPO. Then it became a record investment attraction after the collapse of prices that happened in mid-2014. Will the company manage to do it again, having received more than expected?

American analysts note that the company owns solid assets, but the oil prices below $ 50 per barrel became fatal for the company.

It is very difficult to reduce uneconomic drilling, although the company will try to pay off all the debt obligations by 2024, including the cost of transporting raw materials.