Seventy Seven Energy Inc. filed its Form 8-K with the U.S. Securities and Exchange Commission on Monday, indicating the company has commenced soliciting acceptances of its prepackaged Chapter 11 bankruptcy reorganization plan. The Company set a deadline of June 3 for residual lenders to accept or reject the reorganization plan.
In the SEC filing, the oilfield services company noted that “there can be no assurances that the plan will be approved or confirmed pursuant to the bankruptcy code.”
Seventy Seven entered into a restructuring support agreement in mid-March with certain lenders. The Oklahoman reported that “Seventy Seven would convert $1.1 billion in notes into equity in the new company when it emerges from bankruptcy protection. Vendors, suppliers and customers would not be affected by the bankruptcy filing and are expected to be paid in full in the ordinary course of business.”
The Oklahoma City-based company’s lackluster revenues have been mired in the stagnant conditions afflicting the entire oil and gas industry. “The main factor influencing demand for oilfield services is the level of drilling and completions activity by E&P companies, which in turn depends largely on current and anticipated future crude oil and natural gas prices and production depletion rates,” the SEC filing stated.
Seventy Seven separated from Chesapeake Energy Corporation in June 2014 in a series of spin-off transactions. Historically, the company has provided a significant percentage of its oilfield services to Chesapeake. For the first quarter of 2016, Chesapeake accounted for approximately 64% of the company’s total revenues. As of March 31, 2016, Chesapeake accounted for approximately 59% of the company’s total accounts receivable.