Seventy Seven Energy plans to file for bankruptcy

HOUSTON – U.S. rig contractor Seventy Seven Energy plans to file court papers for Chapter 11 bankruptcy protection next month with a prepackaged deal with creditors in hand, the company said Tuesday.

Seventy Seven’s agreement with lenders would wipe debt off its books by turning $1.1 billion in debt into equity and the company would operate as normal. It said job cuts were not part of the deal.

The company is the nation’s 14th largest land driller and the 11th largest pressure pumping company, according to Spears & Associates, but the company gets the bulk of its revenue from Chesapeake Energy, the oil and gas explorer it spun out of in 2014.

The Oklahoma company has said it wants to diversify its customer base, but it has been a slow process as the oil bust continues to drain cash out of the U.S. oil industry. Last year, Seventy Seven Energy got 70 percent of its sales from Chesapeake, compared to 81 percent the year before, regulatory filings show.

More than 60 U.S. oil and gas companies have filed for bankruptcy in the wake of the oil downturn, according to Dallas law firm Haynes and Boone.