Seventy Seven Energy Files for Bankruptcy

Oilfield services company Seventy Seven Energy Inc filed for a prepackaged Chapter 11 bankruptcy on Tuesday to carry out a plan to convert $1.1 billion of its debt into equity in a reorganized company.

 

Seventy Seven offers drilling and hydraulic fracturing services and was spun out of Chesapeake Energy Corp in 2014. The company said its creditors have already voted overwhelmingly in favor its plan, a process known as a prepackaged bankruptcy.

 

"The successful completion of the solicitation process and today's filing represent the next step forward in our financial restructuring," Chief Executive Officer Jerry Winchester said.

 

The bankruptcy comes as two years of depressed energy prices have forced scores of oil-and-gas producers into bankruptcy. Oil industry service companies have also suffered and on Monday contract drilling company Hercules Offshore Inc filed its second bankruptcy in a year.

 

Oklahoma City-based Seventy Seven said its suppliers would be paid in full and operational contracts will remain in place.

 

The company listed assets of $1.7 billion and debts of $1.8 billion, as of April 30, in documents filed in the U.S. Bankruptcy Court in Wilmington, Delaware.

 

The company will seek to borrow up to $100 million to help finance operations during the bankruptcy, according to court documents.

 

The two largest shareholders of Seventy Seven are Icahn Capital LP and BlackRock Inc, with stakes of 8.1 percent and 4.6 percent, respectively, according to court filings.

 

The company's plan would cancel its existing stock, which was up slightly at 7 cents in midday trade over the counter. The stock traded at more than $25 a share after it was spun off by Chesapeake.

 

Seventy Seven was represented by the Baker Botts law firm and retained Lazard Freres & Co as its investment banker. Alvarez & Marsal was employed as the restructuring adviser.


(Reporting by Tom Hals in Wilmington, Del.; Editing by Matthew Lewis)