L.A. oil firm Breitburn Energy Partners filed for Chapter 11 bankruptcy protection Monday after attempting to stave off insolvency for months.
Breitburn Chief Executive Hal Washburn said in a statement the company had enough capital to continue its operations as normal during restructuring efforts.
“During the restructuring process, we will continue managing our business and operating our assets as we do today,” the statement reads. “Cash from our operations, cash on hand and cash available under the (debtor-in-possession agreement) will provide us with more than sufficient funds to operate our business during the restructuring process.”
The company listed assets at $4.7 billion and debts at $3.4 billion as of March 31. About $3 billion of the firm’s debt is bank and bond debt topped by $1.25 billion in notes held by Wells Fargo Bank.
Many oil firms have been affected by the prolonged swoon in oil prices. Costs have plummeted from more than $100 a barrel for crude to below $30 in January. Prices have stabilized somewhat, hovering around $50. While the swoon has cratered Breitburn’s profitability, the company holds an extensive portfolio of hedges locking in a $85 price point, which could help the firm in its restructuring efforts.
The bankruptcy filing comes after a series of cost-cutting efforts by the company. Breitburn also skipped interest payments of $46 million in April as it contemplated its next steps. The savings plan had included eliminating dividends and reduction of capital spending by more than 60 percent over the past year.
Yet Breitburn’s heavy debt load – much of which stems from a $2 billion debt-financed deal to purchase a Houston oil partnership in 2014 – was too much to overcome without court intervention.