Samson Resources May Request Bankruptcy -- April 1, 2015

I saw this story last night but ran out of time to get it posted. I'm getting a fair number of e-mails on the story, so I better get it posted before I get any more e-mail.

FuelFix is reporting:

Oklahoma oil producer Samson Resources says it doesn’t expect to be able to repay its debt with income from battered oil fields and it may have to file for Chapter 11 bankruptcy protection or face liquidation.

Samson, which had nearly 1,000 employees at the end of last year, also said in its annual report Tuesday it began laying off 30 percent of its workforce this month.

Though it will weigh asset sales, securing more debt and other measures to avoid liquidation, Samson said filing for bankruptcy protection “may provide the most expeditious manner in which to effect a capital structure solution.”

The cash streaming in from oil fields run by Samson and other companies across the U.S. has slowed dramatically as crude prices have plummeted from above $100 a barrel last summer to less than $50 a barrel now. Samson, which operates oil and gas fields in the Rocky Mountains region and in East Texas, said it had $4.2 billion in debt and $220.7 million in cash on hand at the end of February, and is considering whether  to pay upcoming interest payments on its debt.

It cut its annual budget by $156.5 million and said it is selling non-core assets. It collected $48 million selling its properties in Oklahoma and Arkansas’ Arkoma basin.
“We expect ultimately to seek a restructuring, amendment or refinancing of our debt,” Samson said.

In response to a note I received from a reader on this story last night, I responded:

I used to get Samson Resources and Samson Oil and Gas (SSN) mixed up.

The former is a US company (Oklahoma); the latter is Australian.

The former has really mediocre to poor property -- up north in Divide County; at $100 oil it's wonderful; at $50 oil, horrendous.

The latter (SSN) has really good property southeast and east of Williston -- Stockyard Creek.

This bankruptcy is probably just one of the first; and many other companies will sell out before declaring bankruptcy. It's all about liquidity. If CLR and Whiting and EOG can survive, they could pick up a lot of cheap mineral acres. Samson Resources had a respectable 19 permits in 2015; and even as many 5 permits this year. In the big scheme of things, it's really sad; lots of good people will be out of work.

Diclaimer: the response above was opinion only. I often make factual errors in my comments and opinions. If this information is important to you, go to the source. Do not make any investment, financial, travel, or relationship decisions based on what you read here or what you think you may have read here.

Some time ago, GMXR, a relative latecomer to the Bakken, also restructured through bankruptcy and is still operating in North Dakota as Thunderbird Resources. This company, and most others operating in the Bakken, are linked at the sidebar at the right.