$867 million in debt eliminated
Bonanza Creek Energy (ticker: BCEI) announced the approval of its prepackaged bankruptcy in a release today. Bonanza Creek voluntarily entered bankruptcy proceedings on January 4, seeking approval for its prepackaged reorganization plan. The plan sought to transform the company’s balance sheet by equitizing about $867 million in debt obligations. A new equity offering would provide an additional $200 million.
This plan received unanimous support from Bonanza’s creditors and was approved by the court today. The company reports that the equitization of debt has eliminated over $50 million in cash interest, along with improving the company’s balance sheet. Bonanza Creek business operations continued through the proceedings, in accordance with the original bankruptcy plan.
The company originally expected to exit Chapter 11 before the end of Q1 2017, and now projects that it will emerge from bankruptcy before the end of April.
Bonanza Creek President and CEO Richard Carty commented on the approval: “The Court’s confirmation of our Prepackaged Plan represents a significant step toward completing our successful financial restructuring. We will emerge as a strong and deleveraged company with a competitive business plan that will position us well vis a vis our industry peers. Bonanza Creek is thankful for the steadfast support of our dedicated employees, creditors, vendors and other parties throughout the restructuring process.”
Bonanza Creek is primarily active in the Wattenberg field of Colorado. Production is currently declining, as the company idled its drilling program in the first quarter of 2016. The company currently has six DUC wells in the Wattenberg. It is likely that the $200 million equity offering that is planned will fuel the completion of these wells. Bonanza has not released any estimate for when it will resume drilling and completion activity, but it is expected that operations will resume when the company emerges from bankruptcy.
