By Lillian Rizzo 

Cubic Energy Inc., the latest Texas oil company brought down by falling oil prices, filed for bankruptcy protection after reaching a deal with its lenders to hand over control of the company.

Dallas-based Cubic, which drills for oil and natural gas in Texas and Louisiana, said in a chapter 11 filing Friday in U.S. Bankruptcy Court in Wilmington, Del., that it has agreed to cede control of the company to Wells Fargo Energy Capital Inc. and its secured bondholders, which include funds managed by Anchorage Capital Group LLC.

Like many of its peers in the oil and gas sector, Cubic has been hit by the significant decline in prices. On Monday, U.S. benchmark West Texas Intermediate fell below $35 a barrel.

Stubbornly low prices have forced more than three dozen North American oil and gas companies into bankruptcy this year, according to law firm Haynes and Boone LLP.

Cubic also stumbled when its drilling contractors were unable to complete well overhauls, spurring the bankruptcy filing

The company, which was looking for a buyer for more than a year but found no takers, filed for chapter 11 with a so-called prepackaged bankruptcy plan having already secured sufficient votes from creditors to win passage of its debt-for-equity swap.

Cubic has $126.4 million in debt, including $29.9 million secured by the Louisiana properties, owed to Wells Fargo. The bank will take control of the Louisiana holdings, while funds managed by Anchorage, Corbin Capital Partners LP and O-CAP Management LP, will own the rest of the assets. The company's existing shares will be canceled under the proposed plan.

Cubic's investment bankers estimate the reorganization value of Cubic's assets is between $46 million and $76 million, and the value of the Cubic Louisiana holdings is at most $10 million.

Cubic is seeking approval a number of so-called first day motions to keep its business alive pending a sale. The company's properties are being operated and managed by joint operating agreements. About 18% of Cubic's net acres are being run by third parties. The rest is run by Fossil Operating Inc., an entity controlled by Cubic's chief executive, Calvin A. Wallen III.

The law firm of Holland and Knight LLP is handling the chapter 11 case, and Cubic has hired investment bank Houlihan Lokey as its financial adviser

Cubic is seeking a Feb. 12 confirmation hearing on its prepackaged bankruptcy plan. The company is scheduled to make its debut appearance before Judge Christopher Sontchi on Tuesday in Wilmington.

Patrick Fitzgerald contributed to this article.

Write to Lillian Rizzo at Lillian.Rizzo@wsj.com

(END) Dow Jones Newswires

December 14, 2015 16:17 ET (21:17 GMT)

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