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Tuesday, June 18, 2024 | Back issues
Courthouse News Service Courthouse News Service

40 U.S. Oil Bankruptcies Recorded in 2015

HOUSTON (CN) - Swift Energy, the 40th U.S. oil company to file for bankruptcy in 2015 amid slumping crude prices, struck two deals this week that are essential to its reorganization plan.

Swift Energy, of Houston, was founded in 1979 and drills for oil and gas in South Texas and Louisiana.

The company and eight subsidiaries filed for Chapter 11 bankruptcy protection in Delaware on New Year's Eve, making it the 40th U.S. oil producer to file for bankruptcy protection in 2015 and the 20th in Texas.

A U.S. bankruptcy court on Tuesday gave Swift Energy permission to borrow $15 million, which will give it time to negotiate a refinancing deal that's key to its turnaround strategy, Reuters reported.

Swift Energy said Monday that its U.S. subsidiaries plan to sell 75 percent of their stakes in two central Louisiana oil fields to Texegy for more than $48 million. The deal is expected to close on March 15, subject to U.S. bankruptcy court approval, according to bankruptcydata.com.

Swift and a Texegy subsidiary plan to enter into joint development and operating agreements on the closing date to continue drilling on the Louisiana fields, bankruptcydata.com reported.

Texegy is a private oil drilling company that was founded in the fall of 2014.

"We look forward to working alongside Texegy and combining our years of experience and expertise in the region to exploit and enhance the value of these Louisiana assets. This arrangement marks the beginning of a strategic partnership while strengthening our liquidity profile," Swift Energy CEO Terry Swift said in a statement.

Swift will stay on as a company director after the bankruptcy reorganization, which according to the company's plan will take four months and jettison nearly $1 billion in debt.

Under the plan, Swift will convert loan debt owed to senior investors to equity, the company said in a statement.

Swift assured investors it will continue making royalty payments throughout the bankruptcy. The company's more than 200 employees also breathed a sigh of relief with this statement from its officials: "Employees should expect no change in their daily responsibilities and to be paid in the ordinary course."

Experts predict many more U.S. oil producers will go bankrupt in 2016, as Brent Crude, the international standard, sank to an 11-year low of $35.15 on Wednesday, according to Reuters and Bloomberg.

Crude prices cratered from above $114 in June 2014 as U.S. production reached record levels due to new shale drilling technology and the refusal of Saudi Arabia, leader of the Organization of Petroleum Exporting Countries, to cut production in an effort to maintain its market share and put small U.S. drillers out of business.

The United States is now the world's leading producer of oil and natural gas, and produces about 9 million barrels of oil a day, according to Jack Gerard, president of the American Petroleum Institute.

Gerard said the increased production has been good for American drivers' pocketbooks in a Tuesday speech at his trade group's "2016 State of American Energy" event.

"The Energy Information Administration estimates that the American consumer saved, on average, $700 in 2015 on transportation fuel costs as a result of abundant energy," Gerard said at the event.

The average U.S. price for a gallon of gas is $2 below its June 2008 price of $4.10, according to gasbuddy.com.

Experts say tensions between Saudi Arabia and Iran, stoked by Saudi Arabia's execution last week of a Shiite cleric, would normally increase oil prices, with buyers worried that conflicts could disrupt production. Iran is also an OPEC member.

But the glut of U.S. oil and OPEC's decision to maintain full-throttle production levels are keeping prices low.

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