HOUSTON — Sabine Oil & Gas Corp. is seeking Chapter 11 bankruptcy protection, making it the sixth and the largest U.S. oil producer yet to file for bankruptcy because of cheap oil prices.
Court papers filed in New York on Wednesday show the Houston company had $2.48 billion in assets and $2.91 billion at the end of May, the second largest U.S. bankruptcy this year, according to data compiled by Bloomberg. It’s a mid-sized oil and gas company, and had $550 million more in debt than the second-biggest producer to file for bankruptcy this year, Fort Worth-based Quicksilver Resources.
Sabine drills for oil and gas in the Haynesville Shale in east Texas and Louisiana, and the Eagle Ford Shale and the Granite Wash in Texas. It had 165 employees and about thousands of drilling sites across the state.
In a statement, Sabine’s finance chief blamed its high debt and low oil and natural gas prices and volatility across energy markets for the company’s situation, saying it could have otherwise fixed its balance sheet by selling assets – if not for cheap oil and gas devaluing its properties.
Sabine CFO Michael Magilton said the company’s managers has explored its options for five months, from capital spending cuts to selling assets and repurchasing debt, but none of those alternatives would cover its obligations. Its financial troubles began late last year in its merger with debt-laden Forest Oil Corp., a deal that was originally announced in March, before oil prices collapsed.
Sabine said it “continues to engage in constructive discussions with its lenders and debt holders” about the restructuring plan. Its lenders cut the borrowing base of its revolving credit facility – a type of corporate loan from which companies can borrow, repay and borrow again – from $1 billion to $750 million in April.
Besides Sabine and Quicksilver, the other four U.S. producers to file for bankruptcy protection are Saratoga Resources, BPZ Resources, Dune Energy and American Eagle Energy Corp.