US oil and gas producer Energy XXI may be looking into the possibility of filing a bankruptcy protection. The low price of oil made the company fail to refinance its debt causing them to reconsider the move.
For the past weeks, the prices of crude oil are playing just above $40 per barrel which is considered low for its break-even price of $60 per barrel. On December 31, the company has already accumulated $4 billion in liabilities. If oil price still remains low, the company's failure will be considered the second biggest energy-related nosedive in the industry, as per Reuters.
The company was not able to pay its $8.8 million interest on senior notes last February and has tried to reach an agreement with debt holders to restructure its balance sheet. According to the Street Insider, on March 17, 2016, if the interest is not yet paid, the trustee would have the privilege to get at least 25% aggregate of the principal amount of the outstanding 8.25% of the Senior notes which will be considered payable immediately.
As reported by Uptick Analyst, Energy XXI is engaged in getting, finding, developing and operating oil and gas properties onshore in Louisiana and Texas and the offshores of Mexico. The company is said to be working with PJT Partners LP and Vinson & Elkins LLP on its restructuring process.
According to the company, the lack of material improvement in oil and gas, a refinancing or some restructuring of their debt obligations, or another improvement in liquidity will push them to continue with the bankruptcy protection. This is to continue their efforts in restructuring their capital and most especially the business.
According to reports, the largest energy producer to go broke over the past year is Tulsa, an Oklahoma-based Resource Corp which filed its bankruptcy in Delaware last September with a debt balance of $4.3 billion.
