Houston’s C&J Energy Services said Wednesday it reached a new forbearance agreement that runs through June 30 in order to, for now, avoid default and a potential bankruptcy.
The once rapidly growing oil field services company is exploring potential assets sales and restructuring as alternatives to filing for Chapter 11 protection.
In a prepared statement, C&J CEO Randy McMullen said he appreciates the support of the company’s lenders for giving the company more time.
“We believe that this forbearance agreement will provide us sufficient time to work with all stakeholders to address our liquidity issues and high debt levels with a solution that de-levers our balance sheet, strengthening our ability to weather this downturn and ensuring we are strongly positioned to capitalize on the eventual market recovery,” McMullen stated.
Since the end of March, C&J has operated in violation of its loan agreements without enough cash coming in to service the debt. The company previously had until May 31 to find a way to satisfy lenders until the new agreement was announced Wednesday.
In its last quarterly filing with the Securities and Exchange Commission, C&J acknowledged a Chapter 11 bankruptcy filing may prove necessary.
Greater tragedy struck earlier in March when, amid widespread job cuts, C&J’s 46-year-old founder and CEO, Josh Comstock, died after being found unresponsive in his home on March 11. His death was ruled natural and caused by acute bacterial pneumonia, according to the Harris County Institute of Forensic Sciences.
C&J was one of the industry’s fastest-growing oil field services companies, acquiring the well completion and production businesses of Nabors Industries, which has its U.S. headquarters in Houston. C&J took on a large amount of debt to make the acquisitions just as the oil bust got underway more than a year ago.
C&J grew to about 10,000 employees in early 2015 but later slashed nearly 4,000 jobs to bring employment to about 6,100 at the end of February. More jobs have been cut since then, but the company won’t disclose the number.
The company’s stock has traded for less than $1 a share since May 10.
Although McMullen still speaks in favor of the long-term value of the Nabors deal, he said the deal brought in substantial debt during an industry downturn that has proven worse and longer than almost anyone expected.