In the world of corporate bankruptcy and restructuring, they call it Chapter 22.
For the second time in four years, Houston-based oil and gas exploration and drilling company Castex Energy has filed for protection under Chapter 11 of the U.S. Bankruptcy Code in the Southern District of Texas.
Castex, which has 182 onshore oil and gas wells in Texas and Louisiana, filed to restructure on Feb. 26, hired Houston bankruptcy lawyer Matthew Okin as its legal advisor.
In a sworn affidavit filed by Castex chief restructuring officer Douglas Brinkley, the company states that its most valuable asset is a 2019 court judgment it has against Apache Corporation for $69.5 million court in a breach of contract dispute. The verdict is currently on appeal.
Castex filed to restructure in 2017 and exited in bankruptcy in 2018.
In. June 2020, Castex sold its offshore assets to Talos Energy for $65 million.
“In light of commodity prices, the debtors have not been able to generate sufficient cash from operations to satisfy the secured loan obligations and various other obligations as they become due,” Brinkley stated in the affidavit.
“These factors have significantly harmed the debtors’ financial position, and as a result, the debtors have continued to incur losses from operations following their emergence from the prior bankruptcy cases, including since the consummation of the Talos sale,” he stated. “In sum, the debtors’ inability to service their mounting debt obligations and other trade payable obligations due to the prolonged downturn in oil prices has resulted in a severe cash-flow shortage.”