Venoco, one of the biggest oil and gas companies in the U.S., recently announced that it had filed for Chapter 11 bankruptcy protection. According to the Pacific Coast Business Times, the company cited the fall of oil prices and a pipeline spill last year for its $1 billion debt total. As a result, the company shut down operations at its major California pipeline.
Venoco struggles with the fall of oil prices
In its court papers, the company claimed that it was forced to shut down its Plain All American pipelines in California after a spill. This was particularly bad timing for Venoco as it corresponded with the collapse of oil prices last year. With the close of the Plain All American pipeline, the company was no longer able to reach broader markets with the output from its South Coast offshore oil platforms.
Despite its insolvency, however, the company’s CEO Mark DuPuy explained in a statement that it has the cash to maintain current operations throughout the bankruptcy period.
“While we continue to be in a strong cash position, the declining price of oil and the ongoing closure of Plains All American pipeline 901 continue to be serious problems,” DePuy noted.
Venoco reorganization plan calls for executive restructure
Venoco stated that it has secured a refinancing agreement with its senior lenders that will significantly decrease its debt total, while also infusing new capital into operations. With its balance sheet restructured, the company can re-negotiate its lending terms and suspend its debt payments.
In its bankruptcy petition, the company also announced that founder Tim Marquez will continue to serve as executive chairman throughout the bankruptcy period. There is no word whether he will maintain this position in the newly restructured company following the reorganization process.
Otherwise, for more articles on oil or gas companies filing for Bankruptcy, head to: