Cobalt files for Chapter 11, plans asset sale
Houston-based oil company Cobalt International Energy and certain of its U.S. affiliates have filed voluntary petitions for relief under Chapter 11 of the U.S. Bankruptcy Code.
According to its statement on Thursday, Cobalt expects to conduct business in the ordinary course, and its cash on hand is expected to provide Cobalt with adequate liquidity to fund its operations during the restructuring process.
The Chapter 11 Cases are expected to facilitate the restructuring process and the proposed sale of Cobalt’s assets.
Cobalt said it has been engaged in constructive discussions with its first lien noteholders, second lien noteholders, unsecured noteholders and their respective advisors regarding the need for, sponsorship of, and terms of a restructuring and proposed sale of its assets.
The company has assets in the U.S. Gulf of Mexico and West Africa. In the Gulf of Mexico, Cobalt holds lease interests in approximately 125 deepwater blocks in the Inboard Lower Tertiary and Miocene plays and is is the operator of over 85 percent of the leases.
Cobalt plans to utilize the Chapter 11 Cases to continue and complete these discussions with key stakeholders and evaluate other value-maximizing opportunities to facilitate an expedited restructuring that will deliver maximum value to its stakeholders.
Cobalt has filed a variety of “first-day” motions with the court seeking, among other things, authority to use the cash collateral, maintain its existing cash management system and other customary relief. When granted, such motions will assure Cobalt’s ability to maintain business-as-usual operations throughout the restructuring process.
The oil company in mid-November received notice from the New York Stock Exchange (NYSE) that the company’s share price was no longer in compliance with the NYSE listing standards.
Namely, Cobalt’s 30-day average closing share price as of November 13, 2017 was $0.95, in violation of the listing standard which requires the trailing 30-day average closing share price to remain at or above $1.00. The company was given six months to try and lift its share price to $1.00 or above, to regain compliance.
Earlier in November, Cobalt posted a net loss of $150 million for the third quarter of 2017, compared to a net loss of $218 million for the same period of 2016.
The company’s revenues during the third quarter 2017 increased to $14.4 million from $4.2 million in 3Q 2016.
Offshore Energy Today Staff