May 11, 2015
The latest fallout from the oil crash is here: American Eagle Energy has filed for Chapter 11 bankruptcy protection.
In March, the company missed its first interest payment
of nearly $10 million to bondholders, and entered a 30-day grace period.
American Eagle hired financial advisers to negotiate with bondholders.
And according to the Wall Street Journal's
Patrick Fitzgerald, the company filed for bankruptcy protection in a Denver
court, listing assets of $221.9 million and debts of $215.2 million.
In a quarterly filing last Friday, the company
noted (emphasis added):
"The sharp decline in oil
prices that occurred during the latter part of 2014, and the continued
depressed pricing, has materially reduced the revenues that were generated from
the sale of the Company’s oil and gas production volumes during that period,
which, in turn, negatively affected the Company’s year-end working capital
balance. The potential for future oil prices to remain at their current
price levels for an extended period of time raises substantial doubt regarding
the Company’s ability to continue as a going concern. For purposes of this
discussion, the term “substantial doubt” refers to concerns that a company may
not be able to meet its obligations when they come due."
A Chapter 11 bankruptcy filing gives
the company time to restructure its debt without completely stopping all
operations.
The company had sold $175 million of
bonds last August, when West Texas Intermediate crude oil was priced near $100
per barrel, according to Bloomberg.
But the tumble in the oil crash has
punished oil companies that borrowed at the peak of the shale boom. In
November, American Eagle Energy announced it would stop drilling oil until
prices rebounded.
Quicksilver Resources also filed for Chapter 11
bankruptcy in March, listing $2.35 billion in debt.