Halcón Resources planning to file prepackaged Chapter 11 bankruptcy

HOUSTON – Halcón Resources says it’s planning to file for Chapter 11 bankruptcy protection with a deal in hand to restructure its finances, eliminating $1.8 billion in debt.

The Houston oil producer, which drills in North Dakota and Texas, said Wednesday its prepackaged deal with creditors would convert some junior debt tranches into equity and provide cash to preferred equity holders.

The company had $2.9 billion in total liabilities at the end of last year, regulatory filings show, making it the latest midsized U.S. driller to spring for bankruptcy courts amid the toughest oil downturn in decades.

If the company proceeds with the plan, it would be the latest oil and gas bankruptcy in recent weeks and it brings the number of North American drillers in Chapter 11 proceedings to nearly 80. It would follow filings by Linn Energy, which is based in Houston, SandRidge Energy, Breitburn Energy, Energy XXI and Ultra Petroleum.

Fitch Ratings says it expects U.S. oil explorers to default on $40 billion in debt this year, and the proportion of the shale industry that could be wiped out in the process is reminiscent of the telecom crash 15 years ago.