While some E&P companies have relied on various restructuring techniques to weather these challenges, not all have successfully navigated those options, seeking bankruptcy protection instead. If commodity prices remain low, E&P companies will have to continue to work through these financing constraints or seek to restructure through the bankruptcy process.
During the past year many E&P companies have taken steps beyond cost cutting to improve their liquidity and reduce their leverage. Strategies include taking on first, second or third-lien secured debt; issuing unsecured notes; exchanging unsecured notes for new secured debt at a discount; buying back notes at a discount; issuing equity; selling noncore assets; and entering into joint venture or similar agreements to share costs of developing mineral interests. However, as the financial crisis for E&P companies has continued, the options available to such companies have become more limited.
COLOSSUS Team can help you navigate frequently used restructuring strategies.