HOUSTON – Emerald Oil this week joined dozens of U.S. oil producers in seeking Chapter 11 bankruptcy protection amid a punishing oil downturn and said Wednesday it intends to sell its business in an auction.
In court papers, Emerald Oil Chief Financial Officer Ryan Smith said the Denver-based company since last year has stopped most of its drilling, cut 40 percent of its workers and tried to refinance its debt but wasn’t able to consummate at least four attempted deals.
“The debtors have fallen victim to the same macroeconomic forces afflicting the rest of the oil and gas industry,” Smith said in court papers. He said the company considered several financial options but its access to capital markets was “significantly impaired” and the value of its proved developed reserves dropped dramatically.
Emerald Oil pumps most of its crude from North Dakota’s Williston Basin, where drilling activity has been reduced to a fraction of what it once was before the sharp drop in oil prices, which began in late 2014. The company said it has $405 million in total assets and $361 million in total debt.
Emerald Oil said it is planning to sell itself at an auction, though the private company Latium Group has already made an offer for Emerald and will be the leading bidder in the auction. Emerald Oil said it obtained a $20 million loan, subject to court approval, to keep running its operations through bankruptcy.
“Emerald’s plan and the Latium transaction would allow the business to continue to operate and would provide a sound path for potential recovery for company stakeholders,” Emerald CEO McAndrew Rudisill said in a written statement.
JPMorgan Chase & Co. recently estimated 48 domestic oil companies have filed for bankruptcy protection.