Chapparal Energy filed for Chapter 11 in U.S. Bankruptcy Court in Delaware as it seeks to restructure its balance sheet and raise new money. Almost 80% of first-lien lenders and bondholders gave their support for a proposal to swap $300 million of unsecured notes into equity, raise a $175 million reserves-based exit facility and issue $35 million of convertible notes. Covid-19 pandemic has led to a surge in energy industry bankruptcies, as lockdowns strangle demand and prompt lenders to cut credit lines. So far in 2020, the tally has included California Resources Corp., the state’s largest crude producer, and shale gas driller Chesapeake Energy Corp.
Oklahoma City-based oil and gas producer operates in the Anadarko Basin. It previously filed for bankruptcy protection in 2016, following a plunge in crude prices that started in 2014. Lenders cut Chaparral’s borrowing base to $175 million from $325 million in April. At the time, the company had borrowed $250 million on its credit facility, leaving it with a so-called borrowing base deficiency that the company subsequently agreed to pay down in installments. Also in April, Scott Pittman resigned as chief financial officer. The company said it expects that its $32 million of cash reserves will allow it to maintain normal operations in the Chapter 11 restructuring period.