A Tulsa, Oklahoma-based shale driller and a Houston-based provider of drilling fluids are the latest companies in the energy industry to file for bankruptcy protection in South Texas federal courts.
The Houston company, Anchor Drilling Fluids USA, along with its parent company filed a voluntary Chapter 7 petition on Sunday in the Victoria division of the U.S. Bankruptcy Court for the Southern District of Texas. The Tulsa company, Unit Corp., filed for Chapter 11 reorganization on Friday evening in the Southern District’s Houston division.
Houston partner John Higgins of Porter Hedges is leading Anchor Drilling’s bankruptcy. Higgins has stayed busy in recent weeks. He’s also representing Diamond Offshore Drilling, which filed for bankruptcy protection at the end of April. Plus he is representing a group of unsecured creditors in the Neiman Marcus bankruptcy.
According to its voluntary petition, both of Anchor Drilling’s assets and liabilities both fall within the $100 million to $500 million range. The petition filed by Anchor Drilling’s parent company, Q’Max America, lists its assets as less than $50,000 but between $1 million and $10 million in liabilities.
Q’Max America is a subsidiary of the larger, Houston-based oilfield services company Q’Max Solutions. Q’Max America and Anchor Drilling merged in 2017 when Q’Max purchased Anchor Drilling from Indiana-based Calumet Specialty Products Partners for $84 million. Originally based in Tulsa, Anchor Drilling’s headquarters moved to Houston after the merger.
Court filings show that Anchor Drilling has been working to improve its financial situation since last year. Difficulties that Anchor Drilling and Q’Max America have faced include “continued and further reductions in rig activity levels, significant decreases in operating receipts and collection challenges with a major Mexican customer.”
Anchor Drilling and Q’Max America decided to pursue a liquidation bankruptcy after “difficult and protracted” negotiations fell apart with two lenders, HSBC Lending Syndicate and Encina Business Credit. The parties have spent the last few months exploring a debtor-in-possession financing deal as part of a corporate restructuring.
Anchor Drilling said one of the purposes of the would-have-been Chapter 11 proceeding would be to pursue a stalking horse bid on assets that would have preserved the jobs of more than 100 employees in Texas, Ohio, Pennsylvania and New York.
Anchor Drilling and Q’Max America said the purpose of the Chapter 7 bankruptcy will be to pursue the sale of Q’Max’s U.S. subsidiaries.
Christopher M. Lopez is the judge assigned to the case.
Unit Corp. bankruptcy
Unit Corp. and five affiliate companies turned to Houston partner Harry Perrin and Dallas associate Matthew Pyeatt of Vinson & Elkins to lead its Chapter 11 reorganization, which lists major debt. According to its voluntary petition, Unit Corp. has between $500 million and $1 billion in liabilities but only between $10 million and $50 million in assets.
The company’s largest unsecured creditor — by orders of magnitude — is Wilmington Trust, which has a claim for $650 million in unsecured bonds. The company’s second largest unsecured creditor, Northern Energy Services, has a claim for about $1 million. All other claims submitted by Unit’s top 30 unsecured creditors are each valued under $1 million.
Like many other E&P companies that have already filed for bankruptcy protection, Unit Corp. cited the low commodity prices caused by the COVID-19 outbreak and Saudi-Russia pricing war.
Unit Corp. enters its Chapter 11 bankruptcy with a pre-negotiated restructuring support agreement with the holders of more than 70% of the company’s $650 million in senior subordinated notes due next year. The RSA includes debtor-in-possession financing.
In a company statement, Unit Corp. said that its will be able to continue its operations without material disruption throughout its bankruptcy. That includes the operation of its 50%-owned midstream affiliate, Superior Pipeline Company, which is not one of the debtor affiliates.
Evercore Group is serving as Unit’s investment banker. Opportune is serving as its restructuring advisor.
Alfredo Perez of Weil, Gotshal & Manges is leading the legal representation of the ad hoc group of noteholders.
The case has been assigned to Judge David Jones.