Extraction Oil & Gas Inc. (OTCMKTS: XOGAQ) has been given a green light to emerge from Chapter 11 bankruptcy early next year.
A judge in the U.S. Bankruptcy Court of Delaware confirmed the Denver-based oil producer’s bankruptcy plan last week, allowing the holders of the company’s $1.13 billion in senior debt notes to agree to cancel that debt in exchange for 97% of the company’s stock that it plans to issue.
Extraction is the fourth-largest energy operator in Weld County, producing a little over than 18 million barrels of oil and more than 95.85 million MCF of natural gas last year.
It also carried 4.4 times more debt on its books at the end of 2019 than its equity, which put it and other debt-heavy energy producers in the area in deep financial distress after the pandemic and the resulting drop in travel forced oil prices to plummet.
Extraction was widely expected to file for bankruptcy protections in the spring, when it elected to take a grace period on paying $14.8 million on a long-term debt note that was due in 2024.
The company laid off dozens of workers in the year due to the demand shock, coupled with an earlier production battle between Saudi Arabia and Russia that flooded the global market with more cheap oil.
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