Three small U.S. oil companies will file bankruptcy papers soon, they said on Friday, as the financial squeeze that led to scores of bankruptcies across the industry continues.
Houston-based Memorial Production Partners and two others will join the more than 200 other North American drillers and oil field service companies forced into bankruptcy in the two-and-a-half year oil bust. But analysts believe oil and gas bankruptcies will slow dramatically next year as climbing crude prices eases financial players on shale drillers.
“The worst is over with oil prices moving up. Prospects are a lot better than they were a year ago,” said Eric Rosenthal, an analyst at Fitch Ratings. “The recovery of oil prices probably saved a few of them.”
Memorial Production Partners said it plans to cut $1.3 billion in debt as part of an agreement with investors that would require filing for Chapter 11 bankruptcy protection in coming weeks.
The firm’s decision came amid low energy prices and after lenders reduced the amount of money it could borrow. It said its operations and energy production should continue as normal while the company is in legal proceedings.
Forbes Energy Services, a services company based in Alice, plans to file for Chapter 11 bankruptcy on or before Jan. 23 as part of a pre-packaged deal with creditors. In regulatory filings, the company said the energy slump has suppressed demand for its main businesses such as well site and logistic services. Alice is 230 miles southwest of Houston.
A third company, Bonanza Creek Energy of Denver, plans to cut $850 million in debt and raise $200 million in equity as it enters Chapter 11 bankruptcy proceedings next month. The company said its operations will continue as normal and it believes it will emerge from bankruptcy sometime in the first quarter.
Despite the oil bust, “we have been working diligently to reduce our cost structure and improve operating efficiencies,” Bonanza Creek CEO Richard Carty said in a written statement.