Nuverra Turns to Lazard for Debt Restructuring

 

Nuverra has been looking at several financial restructuring options, including a potential debt exchange, the people said this week, asking not to be identified because the deliberations are confidential.

 

Nuverra and Lazard declined to comment.

 

Scottsdale, Arizona-based Nuverra has been weighed down by debt that totaled $520 million as of Sept. 30. Its $400 million in notes due in 2018 are trading at distressed levels, and the company has seen its revenue fall as customers decrease drilling amid the prolonged slump in oil prices.

 

Nuverra, with a market cap around $14 million, had its credit facility slashed by $70 million to reflect lower appraisal values of machinery and equipment, leaving the company with less than $5 million left to borrow under the facility, according to its financial results for the period ended Sept. 30.

 

The company had $31.6 million in cash on hand as of Sept. 30.

 

Depressed oil prices and additional spending cuts at exploration and production companies, often the customers of services firms like Nuverra, will pressure services firms' revenue and cash flow in 2016, according to Moody's Investors Service.

 

Oilfield services companies are expected to see tough competition and poor pricing because of equipment overcapacity, according to the credit rating agency.

 

Giants in the sector including Schlumberger (SLB) and Halliburton have been forced to slash capital spending.

 

Nuverra in December announced it ended a contract with XTO Energy Inc for water-related midstream services in the Bakken shale field in North Dakota, citing a dramatic change in market conditions.

 

Nuverra announced in 2014 that it had made a long-term agreement with XTO to build a 150-mile pipeline network to provide water gathering and disposal services and fresh water delivery.

 

Last year, Nuverra sold Thermo Fluids Inc., an environmental services firm, to Clean Harbors Inc for $85 million.