April 1 Oil and gas producer GMX Resources Inc
filed for Chapter 11 bankruptcy protection, hit by weak
natural gas prices.
The company, with assets in the Williston Basin in North
Dakota and Montana, the Denver Julesburg Basin in Wyoming and
the East Texas Basin, said it couldn't raise funds for long-term
Two GMX units - Diamond Blue Drilling Co and Endeavor
Pipeline Inc - also filed for bankruptcy protection.
Diamond Blue has minimal assets, while Endeavor Pipeline
operates a natural gas gathering system in the East Texas Basin.
GMX also has a 60 percent stake in Endeavor Gathering, which
owns the natural gas gathering system and related equipment
operated by Endeavor Pipeline. GMX did not include Endeavor
Gathering in the filing.
The company said it was negotiating an agreement with
holders of its senior secured notes due 2017 for them to acquire
substantially all its operating assets and undeveloped acreage.
These "stalking horse bids" set baseline offers for the
assets and are still subject to auctions. The sale also needs
approval from the Bankruptcy Court.
GMX said it has obtained debtor-in-possession financing of
up to $50 million from the bondholders.
Natural gas prices have dropped sharply as record production
from U.S. shale fields created a glut. Natural gas prices were
as high as $14 per million British thermal units (BTU) in 2005,
compared with slightly below $4 per million BTU on Monday.
GMX like others has been trying to raise its oil output but
the fuel accounted for only 11 percent of total net production
in the third quarter, the company's last reported quarter. GMX
has reported losses for the last eight quarters.
The company in March suspended payment of quarterly
dividends on its preferred stock. Later that month, GMX missed
an interest payment on senior secured notes due 2018.
It said on March 4 that it had to make the payment within 30
days to avoid defaulting on the debt.
GMX had total assets of $281.1 million and liabilities of
$458.5 million as of Dec. 1, according to court documents.
The case is In re: GMX Resources Inc, U.S. Bankruptcy Court,
Western District of Oklahoma, No:13-11456.