Oil and gas driller Samson Resources Corp. filed for bankruptcy in Delaware on Wednesday night, undone by a collapse in energy prices and billions in debt that KKR & Co. and other investors piled on to fund a 2011 takeover.
Tulsa, Okla.-based Samson and its owners were stung by the price drop that put money into the pockets of consumers through lower gasoline and heating costs, while driving other producers, such as Sabine Oil & Gas Corp. and Quicksilver Resources Inc., into Chapter 11.
Samson has an office in Denver and operates in the San Juan basin, where it produces 74.5 million cubic feet per day of natural gas.
The filing is among the biggest energy bankruptcies in the U.S. this year.
The shale-oil driller is, in a way, a victim of its own success. Samson and other producers have rushed to use hydraulic fracturing and horizontal drilling to tap previously hard-to-reach oil and gas deposits in shale formations, triggering a production boom that helped send prices tumbling.
Samson has said it will use the Chapter 11 process to try to shrink its $4.2 billion debt load. Second-lien lenders will own “substantially all of the equity” of the company if the plan goes through, according to a statement last month.
The plan has support from more than 68 percent of second-lien lenders, Samson said Wednesday. That backing could help speed the company through reorganization. Samson said it has as many as 10,000 creditors and that it will keep operating while in bankruptcy.
“The steps we are taking will allow our company to maximize future opportunities and compete more effectively with significantly less debt on our balance sheet,” said CEO Randy Limbacher in a statement.
The company said it plans to get through the initial phases of its bankruptcy case quickly and seek court approval for a reorganization plan by Dec. 1.
New York-based KKR, controlled by billionaire investor Henry Kravis, oversees $102 billion in private equity, credit, real estate and hedge fund capital.
It led a takeover of Samson in 2011, adding $3.8 billion in debt on the company. Including capitalized costs, rollover debt and fees, the total package came to $7.9 billion.
A group led by Silver Point Capital LP, Cerberus Capital Management LP and Denver-based Anschutz Investment Co. agreed to cancel the debt Samson owes them in exchange for ownership, and use as much as $485 million to pay down first-lien debt and “provide liquidity,” the company said in August.
The agreement might face opposition from lower-ranking creditors, whose $2.25 billion in debt could be wiped out.
