Approach Resources Becomes Latest Energy Producer to Declare Bankruptcy
November 19 2019 - 12:48PM
Dow Jones News
By Jonathan Randles
Approach Resources Inc. filed for bankruptcy Monday, the latest
in a string of chapter 11 filings by financially distressed
oil-and-gas drilling companies grappling with a decline in
commodity prices.
Fort Worth, Texas-based Approach said it will explore a
restructuring of its balance sheet, a going-concern sale of its
business and other alternatives while under chapter 11 protection.
The company has drilling operations in West Texas, having acquired
oil and gas properties in the Permian Basin since 2004.
More than 30 oil-and-gas producers filed for bankruptcy this
year through September, according to a report by the law firm
Haynes & Boone LLP, already surpassing the number of filings
for each of the previous two years.
Approach reported revenue of about $14.7 million and a net loss
of approximately $13.6 million for the second quarter. The company
reported total debt obligations of $407.2 million, according to
papers filed in U.S. Bankruptcy Court in Houston.
Approach's business, like many other U.S. oil and gas producers,
has been negatively impacted "by the prolonged and continuing
period of commodity price decline and subsequent volatility,"
Approach President and CEO Sergei Krylov said in a declaration
filed in court.
Mr. Krylov said the company has attempted to weather industry
headwinds through layoffs, cost cutting and "substantial
reductions" in its drilling program.
Approach has lined up a bankruptcy financing package from its
existing lenders to fund its operations while under court
protection. The financing includes $16.5 million in new money and
lets lenders roll up, or pay off, $24.75 million under the
company's existing credit agreement.
The loan package is being funded by eight banks including
JPMorgan Chase Bank NA, KeyBank NA, Royal Bank of Canada, Frost
Bank and Wells Fargo Bank NA, according to court papers.
Approach has filed several customary motions in the bankruptcy
court to continue paying wages, taxes and other ordinary business
costs as it eases into chapter 11.
Judge Marvin Isgur has been assigned to the bankruptcy case,
number 19-136444.
Approach is being represented by Thompson & Knight LLP and
has retained Alvarez & Marsal North America LLC as financial
adviser and Perella Weinberg Partners LP to provide investment
banking advice.
Write to Jonathan Randles at Jonathan.Randles@wsj.com
(END) Dow Jones Newswires
November 19, 2019 12:33 ET (17:33 GMT)
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