Fracturing firm files for bankruptcy protection

HOUSTON — Green Field Energy Services, which uses natural gas to run its hydraulic fracturing equipment, filed for bankruptcy protection on Sunday after defaulting on payments for two loans.

Green Field, which has an $80 million loan from Shell, defaulted last month on a payment, according to court filings. The company also defaulted this month on a separate, $250 million loan, from Wilmington Trust, according to the filing.

Green Field is the only company so far that has been able to run fracturing equipment on 100 percent natural gas. Shell has been its top customer, accounting for 79 percent of Green Field’s $144 million in revenue last year, according to court filings.

But the company started offering its fracturing services at a time when competitors were expanding and other companies were entering the market, creating a sudden glut in equipment, Green Field President Enrique Fontova said in an interview.

“Back in 2011 in this market, the demand far exceeded the supply and margins were much higher, which was how we entered the market,” Fontova said. “But very quickly the conditions changed to where there was an oversupply.”

Green Field attempted to rapidly expand to compete with larger companies offering similar pressure pumping services. But the company failed to turn a profit in four of the last five years, according to court filings. It grew from just eight fracturing pumps in 2011 to 65 pumps this year.

“In order to be successful, pressure pumping companies really need scale of multiple spreads and large supply chains,” Fontova said.

Natural gas prices fell dramatically as Green Field expanded, resulting in less drilling for the resource. That meant there was not as much demand for the company’s pumps, particularly from drilling operations located in natural gas-rich plays.

“Unfortunately, market conditions changed for the worse” after the company began expanding, Green Field said in bankruptcy filings. Green Field was then forced to rely on a smaller group of customers then previously planned, which “severely reduced revenues,” the company said.

$404 million

The oil field services company, which is based in Lafayette, La., filed for protection in Delaware under Chapter 11 of the U.S. Bankruptcy Code.

The company has put its equipment in storage and is working with “strategic partners” to find a way to offer the technology to the drilling industry, Fontova said. He said some of the company’s 335 employees were no longer required, but would not say if they had been laid off. The company has employees at 14 facilities in Louisiana and Texas, including offices in Houston.

“We’ve ceased operations and so the employees associated with those operations are no longer required,” Fontova said.

Green Field has at least $404 million in outstanding debt, according to a list of its top 30 creditors filed in bankruptcy court.

Green Field holds a 50 percent stake in Turbine Power Technology, which retools retired military helicopter engines so that they can be used in hydraulic fracturing pumps. The engines can run on diesel, jet fuel, or fully on compressed natural gas, liquefied natural gas, or field natural gas piped directly from nearby wells.

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Green Field’s debt includes $255 million currently owed to Wilmington Trust. Apart from its loans, the company also owes $96 million to other companies, including National Oilwell Varco and Weatherford.

Green Field reported a net loss last year of $74.6 million and has a net loss of $81.4 million so far this year.

CEO’s ownership stake

Green Field’s revenue has soared as it started to use more pumps in the field, jumping from $33 million in 2011 to $183 million through Aug. 31 of this year, according to court filings. The company reached a milestone in September, when it powered a hydraulic fracturing job by only using natural gas tapped from a nearby well.

Green Field’s CEO, Mike Moreno, has an ownership stake in more than 91 percent of the company. The remainder of the business is owned by Fontova.

Moreno has held a stake in several companies that do business with Green Field, including some that are on the company’s list of top creditors. For example, Green Field owes $6.6 million to Chem Rock Technologies, a company that makes fracturing chemicals in which Moreno held a substantial stake. Until early this year, Chem Rock Technologies was half owned by a company in which Moreno owns a third of the shares.

Green Field had leased two private aircrafts, which the company used for business and which Moreno also accessed for personal use, according to court filings. The company terminated those leases prior to filing for bankruptcy protection, according to filings.

Fontova would not comment on decisions related to the aircraft leases.

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