Image courtesy of SandRidge Energy.

SandRidge Energy said Monday that it has filed for Chapter 11 bankruptcy protection.

The Oklahoma-based company has filed voluntarily petitions under Chapter 11 of the U.S. Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas to consummate a pre-arranged reorganization through a restructuring support agreement.

SandRidge said the restructuring agreement contemplates a reserve-based lending (RBL) facility and the equitization of $3.7 billion of other funded indebtedness.

Under the agreement, the company’s pro forma capital structure will consist of $425 million in first lien RBL debt maturing in 2020 and $300 million in mandatorily convertible debt that will accrue interest on a non-cash basis and convert into equity in the reorganized company.

The company projects having ample liquidity to fund its ongoing operations and its capital programs throughout the Chapter 11 process and after the process is complete without the need for debtor-in-possession financing or other additional capital.

As part of the Chapter 11, SandRidge has filed “first day” motions that, when granted, will enable the company’s day-to-day operations to continue as usual.

“We are pleased that our creditors recognize the long-term value SandRidge and its employees can create with an improved balance sheet. The new capital structure will allow the Company to concentrate on oil and gas exploration and development in our active Oklahoma and Colorado project areas,” SandRidge President and CEO James Bennett said.

Kirkland & Ellis is serving as legal counsel to SandRidge and Houlihan Lokey is serving as financial advisor.

SandRidge confirmed in April that it had hired advisers to evaluate potential restructuring options.

SandRidge’s total debt stood at $3.6 billion as of December 31.

The company also had $11 million in outstanding letters of credit as of December 31 and preferred stock outstanding with an aggregate liquidation preference of $542 million.

The New York Stock Exchange delisted shares of SandRidge in late January after the stock’s price stayed below $1 per share for more than seven months.
SandRidge posted a fourth quarter 2015 adjusted EBITDA o f$79 million in the fourth quarter of 2015, down from $239 million in the fourth quarter of 2014.
Full year adjusted EBITDA for 2015 was $589 million compared to $873 million in 2014.
The U.S. Department of Justice dropped an antitrust investigation into SandRidge’s leasing practices last month.


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