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.
The company has been seeking financing to solve its liquidity problems, but was unable to find any long-term solutions, GMX said in a statement.
GMX opted for bankruptcy after talking to its creditors and advisers. Court-supervised reorganization is expected to provide access to financing, including the proposed sale of company assets.
The company has lined up as much as $50 million in debtor-in-possession financing to fund its operating expenses.
GMX said it has notified the New York Stock Exchange of its bankruptcy filing, which could lead to a delisting of the company's stock. The company, which has been out of compliance with listing standards since Feb. 23, said it would not contest that.
GMX's stock has not traded since Friday, when it closed at $2.19 a share.
GMX, which was founded in 1998, has been publicly traded since 2001. It is developing oil-rich acreage in North Dakota and Wyoming, with additional holdings in Louisiana and east Texas.
The company employs 65 people.