Cubic Energy Files for Bankruptcy Due to Low Oil Price

by San Antonio Attorney

Texas-based company Cubic Energy, filed for bankruptcy protection stating plummeting oil prices as the main cause.

The filing took place after reaching a deal with its lenders to hand over control of the company.  Cubic ceded control over to Wells Fargo Energy Capital and its secured bondholders, including an affiliate of Anchorage Capital Group.

The company runs its drill operations for oil and natural gas in Texas and Louisiana, according to a Chapter 11 petition filed last Friday.

The plunge in oil prices have adversely affected oil and gas companies in North America, forcing them to file for bankruptcy, Cubic Energy is one of the latest companies to join the roster.

More than three dozen oil and gas companies in North America have already filed for bankruptcy in 2015.

This petition was aided with a prepackaged bankruptcy plan.

The company has already secured the votes to secure passage of its debt-for-equity swap and its existing shares will be canceled under the proposed plan.

Business operation problems and plunging oil prices were cited by Cubic as the main cause of financial problems.

West Texas Intermediate, a benchmark in oil pricing, fell below $35 a barrel on Dec. 14, decreased by 65% from a high in 2014 of at least $100 a barrel.

The company went over the edge when the drilling contractors failed to complete well overhauls, spurring the bankruptcy filing, according to the Wall Street Journal.

Cubic has a total of $126.4 million in debt, including $29.9 million secured by its Louisiana properties, owed to Wells Fargo.

The Louisiana holdings will be assumed by the bank. The funds will be administered by Anchorage, Corbin Capital Partners, and the outstanding assets will go to O-CAP Management.

The reorganization value of assets is at least $46 million, and the value of the Louisiana holdings is at most $10 million, as estimated by Cubic’s investment bankers.

 

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