Energy XXI has became the latest energy firm to file for bankruptcy.
The Houston-based company said Wednesday that it and “certain of its subsidiaries” have entered into a restructuring support agreement (RSA) with holders of more than 63 percent of the company’s second lien 11 percent notes.
The company has commenced cases under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division.
Energy XXI said the restructuring will eliminate more than $2.8 billion in debt from its balance sheet, substantially deleverage its capital structure and eliminate “substantially all of the company’s prepetition funded indebtedness other than its first lien reserve based loan facility.”
Energy XXI is also continuing ongoing negotiations with a steering committee of lenders under the company’s first lien reserve based loan facility that is not a part of the RSA at this time.
The company expects operations to continue as normal throughout the court-supervised financial restructuring process, including paying royalty and surety obligations in the ordinary course.
Employee pay and benefits are also expected to continue without interruption.
The company said it expects to pay suppliers and vendors in full under normal terms for goods and services and anticipates making royalty payments and payments to working interest owners when those payments are due.
Energy XXI added that it also expects to maintain compliance with its existing long-term plan with the Bureau of Ocean Energy Management throughout the restructuring process.
Current CEO and president John Schiller will stay on as the company’s chief and as a member of the board of directors after the reogranziation is complete.
“Today’s announcement reflects the next step in our efforts to respond proactively to the challenging market environment….Our production is on track as we continue to focus our operations on low-risk, high-return projects,” Schiller said.
The company believes it has sufficient liquidity, including about $180 million of cash on hand as of March 31 as well as funds generated from ongoing operations, to continue its operations and support its business in the ordinary course during the restructuring process.
Energy XXI has filed various motions with the Bankruptcy Court in support of its financial restructuring and said it expects to receive court approval for the requests in its motions.