With a debt burden of nearly $4 billion, Oklahoma City-based SandRidge Energy Inc. reportedly is exploring debt restructuring options. In short, the company could be headed to chapter 11 bankruptcy. As the website Zero Hedge put it in a headline, “SandRidge on the Verge Bankruptcy: Would be 2nd Largest Shale Chapter 11 in Past Year.”
Reuters reports the company is in talks with investment banks and law firms about hiring restructuring advisors and might have an announcement this week on their appointment.
One of those possible appointments could be Houlihan Lokey which was reportedly hired by SandRidge earlier in the month to begin drawing up a restructuring plan. Reuters also reported that the company has been reaching out to creditors to inform them of the looming steps and expressing hopes the creditors will work with them in negotiations.
Most of the company’s debt is said to be in the form of bonds owned by several mutal funds, hedge funds and other institutional investors. Since the company is not commenting publicly, some suggest the company could have enough cash to continue doing business several more months under its current structure.
SandRidge Energy is known for its exploration in the Mississippi Lime in northern Oklahoma and southern Kansas. It’s also an area where SandRidge has dozens of wastewater injection wells to handle the large amount of saltwater from the wells. The company’s also faced reductions of operations at some of the wells because of their possible link to earthquakes in the region.
Just last week, SandRidge announced it had sold the downtown Brannif building in Oklahoma City as well as millions in natural gas holdings in the Pinon Field in west Texas. It’s coughing up $11 million in cash and the Pinon assets to Occidental Petroleum Corporation in order to settle a dispute stemming from a 30-year agreement with Occidental. SandRidge, founded in 2006 by former CEO Tom Ward is also attempting to unload the former Kerr McGee headquarters it purchased some years ago.
