Cubic Energy has become the latest North American oil and gas company to be forced into bankruptcy by the plunge in oil prices.
Cubic, which drills for oil and natural gas in Texas and Louisiana, said in a Chapter 11 petition filed on Friday that it had agreed to cede control of the company to Wells Fargo Energy Capital and its secured bondholders, including an affiliate of Anchorage Capital Group.
The petition came with a prepackaged bankruptcy plan, with Cubic having already secured the votes to secure passage of its debt-for-equity swap. The company’s existing shares will be canceled under the proposed plan.
Cubic blamed its financial woes on operational problems and plummeting oil prices. U.S. benchmark West Texas Intermediate fell below $35 a barrel early Monday, down more than 65% from a high last year of more than $100 a barrel.
“Cubic also stumbled when its drilling contractors were unable to complete well overhauls, spurring the bankruptcy filing,” the Wall Street Journal said.
More than three dozen North American oil and gas companies have filed bankruptcy this year, according to law firm Haynes and Boone.
Cubic has $126.4 million in debt, including $29.9 million secured by its Louisiana properties, owed to Wells Fargo. The bank will take control of the Louisiana holdings, while funds managed by Anchorage, Corbin Capital Partners, and O-CAP Management will own the rest of the assets.
Cubic’s investment bankers estimate the reorganization value of its assets is between $46 million and $76 million, and the value of the Louisiana holdings is at most $10 million, according to the WSJ.