DENVER — Weld County’s fourth-largest oil and gas producer has filed for Chapter 11 bankruptcy as the broader energy industry continues to struggle with debt and weak demand for fuel due to the pandemic.
In a statement Monday morning, Denver-based Extraction Oil & Gas Inc. (Nasdaq: XOG) said it secured $125 million in new financing to keep the company in business through the bankruptcy period. He also said he reached an agreement to restructure some of his long-term debt to give his major bondholders a majority stake in the company, but noted that not all of his bondholders agreed to that plan.
Mining carried a significant amount of debt starting in 2020, ending last year with a debt-to-equity ratio of 4.4, according to a BizWest review of oil companies operating in Weld County. It ended the last quarter with $2.28 billion in liabilities, including $1.08 billion in long-term debt.
Then the coronavirus pandemic swept through the United States, Europe and other major economies, and the resulting stay-at-home orders sent fuel demand plummeting as travel came to a halt. West Texas Intermediate prices fell to around $20 a barrel in March and temporarily turned negative, putting several producers in dire financial straits.
Whiting Petroleum Corp. (NYSE: WLL) already filed for bankruptcy in April to reorganize $2.2 billion in long-term debt.
The extraction was showing signs of stress over the past few weeks. In mid-May, the company opted to suspend payment of $14.8 million in interest on long-term debt due in 2024 and took a 30-day grace period, which expired on Sunday.
Earlier this week, Extraction executives agreed to receive $6.7 million in payments to sign retention agreements and cancel their participation in a company incentive plan, according to a disclosure to the Securities and Exchange Commission. United States Exchange Commission.
Retention agreements are often used to prevent key executives from fleeing a company in the midst of bankruptcy.
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