Struggling oil and natural gas producer GMX Resources Inc. has filed for bankruptcy protection, the company announced Monday.
“GMXR does not have the capital to continue a drilling program to develop its proven undeveloped oil and gas reserves or the liquidity sufficient to pay its operational expenses and debt service obligations,” GMX President Michael Rohleder said in a court filing.
GMX and subsidiaries Endeavor Pipeline Co. and Diamond Blue Drilling Co. have filed a voluntary petition for reorganization under Chapter 11 with the U.S. Bankruptcy Court in Oklahoma City. The filing does not include Endeavor Gathering LLC, a joint venture in which GMX owns a 60 percent stake.
The Oklahoma City company lists assets of $281.1 million, with debts totaling $485.5 million.
“Based on GMXR's current capital structure, liquidity constraints, and inability to raise new capital, it has become necessary for GMXR to seek chapter 11 protection in order to protect and preserve its going concern value and to facilitate a prompt sale of all of its assets for the benefit of all stakeholders,” Rohleder wrote. “GMXR has determined that this is the best way to ensure that the maximum value of its assets will inure to the benefit of its stakeholders.”
The company is pursuing an asset purchase agreement with holders of its senior secured notes to acquire the bulk of its operating assets and undeveloped acreage for future sale.
GMX has been working to increase oil production, improve efficiencies and slash costs for the past year, but its successes have been offset by low natural gas prices and the expense of funding operations, the company said.