$19 billion default wave poised to come crashing down as debt catches up to oil increase

The wave may want to start within days if energy XXI Ltd., SandRidge strength Inc. and Goodrich Petroleum Corp. fail to attain agreements with lenders and shareholders. the ones are 3 of at least 8 oil and fuel producers that have introduced ignored debt payments, triggering a countdown to default.

“Shale was a warm increase location and groups made the mistake of borrowing an excessive amount of,” stated George Schultze, founder and chief funding officer of Schultze Asset management in ny, which has been betting towards numerous distressed power organizations. “It’s first-rate that so many people were willing to lend them cash. Many are going to file for bankruptcy, and bondholders and fairness are going to get worn out en masse.”

Bondholders are paying dearly for backing a shale growth that become built on high-yield credit. since the start of 2015, 48 oil and fuel manufacturers have long past bankrupt owing more than US$17 billion, in line with regulation firm Haynes and Boone. Fitch scores Ltd. predicts US$70 billion of power, metal and mining defaults this 12 months, and notes that US$77 billion of electricity bonds are bid beneath 50 cents, in step with a observe Thursday.

A consultant at power XXI declined to remark. Representatives for SandRidge and Goodrich didn’t respond to requests looking for remark.

Restructuring Plan

Goodrich Petroleum is calling shareholders and bond investors to approve a restructuring deal that might convert its unsecured debt and preferred stocks into common stock. For the plan to work, shareholders ought to approve it at a March 14 assembly and sufficient bondholders want to take part by using the March 16 alternate deadline.

 “Absent a a hit completion of the recapitalization plan, the organization will have no options aside from to are seeking protection thru the financial ruin courts,” Walter Goodrich, chairman and chief government officer, said on a March 9 conference call.

missed hobby payments and capability defaults consist of:

•           power XXI, with US$2.875 billion in debt, and SandRidge power, which owes US$4.131 billion, both did not pay hobby due Feb. 16 and will default except they reach agreements with their creditors with the aid of March 17.

•           extremely Petroleum, which owes US$three.197 billion, stated final week it has until April 30 to hammer out a address its creditors.

•           Goodrich Petroleum, which owes US$455 million, said this week that it gained’t pay interest due March 15 and April 1, and that it’s asking bondholders and shareholders to take part in a restructuring plan.

•           Chaparral energy Inc., with US$1.798 billion in debt, missed a charge on March 1, beginning the clock on a 30-day grace period.

•           Pacific Exploration & production Corp., with US$5.428 billion in debt, likewise has till the quit of the month underneath an extension granted by using its lenders.

•           Venoco Inc., facing US$708 million in debt, skipped an hobby price closing month. The company need to cut a address lenders with the aid of March 17.

•           Warren assets Inc., which owes US$453 million, stated final month that it may record financial disaster without a creditor deal. The company confronted a default on March 2, whilst a 30-day grace period for a ignored hobby duration had been set to expire.

A representative at Pacific declined to remark. Representatives for Warren assets, ultra Petroleum, Chaparral and Venoco didn’t go back calls and e-mails inquiring for remark.