Oil and Gas Explorer Halcon Resources Files Pre-Packaged Bankruptcy

by San Antonio Attorney

Oil and gas explorer Halcon Resources Corp.  sought for bankruptcy protection as one of the conditions in a reorganization deal reached in May with major lenders of the company.

The deal would absolve $1.8 billion in debt plus $200 million in yearly interest payments, as stated in documents filed in court.  Most of the creditors approved of the proposal, according to reports.

The filing on July 27, 2016 in Delaware bankruptcy court showed $2.85 billion in assets and $3.12 billion in liabilities.

Halcon’s founder, Floyd Wilson, became a prodigy in America’s oil shale industry when he sold Petrohawk Energy Corp.  for the price of $15.1 billion five years ago.  He purchased acres of land in Texas, Pennsylvania, Mississippi, and North Dakota, but his plans did not work out and oil prices declined.  Halcon’s liability blew up to $2.9 billion.

Halcon mainly operates on onshore U.S.  oil assets and typically produces around 41,000 barrels of oil per day in 2015, as shown in the company’s financial statements.  An estimated 79% of its yield was oil, about 10% was natural gas liquids and the remaining was natural gas.

The restructuring agreement released in May stated that all stakeholders, together with common shareholders, are going to get new stock or receive cash.

In exchange for eliminating the debt they are owed, the company’s ownership will be divided among noteholders.  However, the plan has to be confirmed by U.S.  Bankruptcy Judge Brendan Linehan Shannon.

Halcon’s noteholders have already given their support for the restructuring deal before the Chapter 11 bankruptcy petition was filed, saild Halcon President Stephen W.  Herod.

Chapter 11 bankruptcy often makes it to the news whenever a big corporation experiences financial problems and seeks bankruptcy relief.  In general, a Chapter 11 petition is filed voluntarily.

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