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Energy Fort Worth energy firm files for bankruptcy

Fort Worth energy firm files for bankruptcy

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Robert Francis
Robert Francis
Robert is a Fort Worth native and longtime editor of the Fort Worth Business Press. He is a former president of the local Society of Professional Journalists and was a freelancer for a variety of newspapers, weeklies and magazines, including American Way, BrandWeek and InformatonWeek. A graduate of TCU, Robert has held a variety of writing and editing positions at publications such as the Grand Prairie Daily News and InfoWorld. He is also a musician and playwright.

Fort Worth-based Basic Energy Services Inc. has filed for Chapter 11 bankruptcy on Tuesday, Oct. 25.

Basic Energy has been working with creditors to align its debt burden with depressed energy prices, but, like many North American oilfield services companies, has had difficulty with the price of oil remaining low.

At least 100 North American oilfield services companies have gone bankrupt in 2015 and 2016 as energy prices slid, according to a tally by the la6w firm Haynes & Boone. Debt burdens taken on when oil topped $100 a barrel earlier in the decade are proving unmanageable now that prices are at about half that level, even after this year’s 35 percent rally.

Creditors of Basic Energy including secured term lenders and senior unsecured bondholders have agreed to a prepackaged reorganization plan that calls for Chapter 11 filings by the parent and some subsidiaries, the Fort Worth-based company said Monday in a statement. The company warned in a July 29 filing it may be unable to stay in business if it couldn’t find a way to repay or refinance its debts, and it skipped an $18.4 million interest payment in August.

The plan will reduce debt and provide $125 million of liquidity, according to a company statement. The timetable envisions the company out of bankruptcy before the end of the year, Basic Energy said.

Holders of the $775 million of unsecured notes due 2019 and 2022 will receive 99.5 percent of the reorganized company’s equity while existing shareholders initially will wind up with 0.5 percent. Those stakes are expected to be diluted further based on other terms of the plan, the company said.

The “sharp and prolonged period of depressed commodity prices” in recent years sapped operating cash flow, Chief Executive Officer Roe Patterson said in Monday’s statement.

“After careful consideration, we have taken this difficult but necessary step to secure a bright future for Basic Energy Services,” said Patterson. “This process is about fixing our capital structure for the long-term to benefit all of our stakeholders.”

Basic provides well site services in more than 100 service points throughout the major onshore oil and gas producing regions, and it employs more than 3,500 people.

Basic has retained Weil, Gotshal & Manges LLP as legal counsel and Moelis & Company as financial advisor during the restructuring.

Additionally, the company engaged David Johnston of AP Services LLC (and a Managing Director at AlixPartners LLP) as chief restructuring officer. Johnston is supported by a team including Charles Braley and Brian Huffman as senior vice president and vice president of restructuring, respectively. – This report includes material from Bloomberg. 

www.basicenergyservices.com/restructuring

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