CHICAGO U.S. oil and gas producer Energy XXI Ltd may seek Chapter 11 bankruptcy protection as soon as next week if oil prices remain low and it fails to refinance its debt, the company said in a regulatory filing.
Brent crude has rallied in recent weeks to above $40 a barrel, but prices are still far below the $60 per barrel break-even level for the Houston-based company.
With some $4 billion in liabilities as of Dec. 31, a bankruptcy filing by Energy XXI would be the second biggest energy-related failure since a prolonged slump in oil prices has put a slew of oil and gas producers at risk of default.
Energy XXI missed an $8.8 million interest payment on senior notes on Feb. 16 and has been trying to reach a deal with debt holders to restructure its balance sheet before a 30-day grace period ends on March 17.
"Absent a material improvement in oil and gas prices or a refinancing or some restructuring of our debt obligations or other improvement in liquidity, we may seek bankruptcy protection to continue our efforts to restructure our business and capital structure," Energy XXI said in the U.S. Securities and Exchange Commission filing on Monday.
The company, with oilfields in South Louisiana and the Gulf of Mexico, also said in the filing that it may have to liquidate assets for less than their value on its balance sheet. It had a $1.3 billion loss in the second quarter ended Dec. 31.
Energy XXI has been working with PJT Partners LP and Vinson & Elkins LLP on restructuring options, according to the filing.
The biggest energy producer to go bankrupt over the past year has been Tulsa, Oklahoma-based Samson Resources Corp, which filed Chapter 11 in Delaware in September with $4.3 billion of debt.
(Reporting by Tracy Rucinski; Editing by Richard Chang)