Denver-based Extraction Oil and Gas latest producer to file for bankruptcy - The Denver Post

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Extraction Oil and Gas, one of Colorado’s major producers, has filed for bankruptcy after paying top executives and managers millions to stay on board.

The Denver-based company, saddled with $1.55 billion in long-term debt,  said in a statement Sunday that it has filed for Chapter 11 bankruptcy protection. Just a few days before that, Extraction approved paying 16 of its executives and senior managers a total of $6.7 million in retention agreements, saying it determined that “its historic compensation structure and performance metrics are ineffective in motivating and
incentivizing the Company’s workforce in the current environment.”

Extraction said it secured a $125 million financing plan that would provide $50 million in new money when the U.S. Bankruptcy Court issues an order.

The  company was the third-largest oil and gas producer in Colorado in 2019, after Occidental Petroleum and Noble Energy, according to the Colorado Oil and Gas Conservation Commission.

Extraction, which operates on the northern Front Range, announced in early April that it was cutting its 2020 budget for exploration and production by 42% to a range of $250 million to $300 million. It said it would reduce its general and administrative cash budget by 18% to a range of $40 million to $50 million and that all company officers were taking a 10% pay cut.

In February, Extraction reduced about 20% of its statewide positions.

“The restructuring steps we have announced today are necessary to strengthen our balance sheet, improve our overall cost structure, and position Extraction for future success,” Matt Owens, the company’s CEO, said Sunday.

Plummeting oil prices spurred by a glut of oil, a price war between Saudi Arabia and Russia and an abrupt drop in demand due to the coronavirus pandemic have combined to force oil and gas companies across the country to slash budgets and lay off employees. However, even before the pandemic many companies were struggling with heavy debt, which led to a crackdown by investors and demands that oil and gas producers generate more returns.

Whiting Petroleum, also based in Denver, filed for bankruptcy April 1.

Extraction’s stock priced opened at 50 cents a share Monday, It was $3.68 per share on June 17, 2019.

Last week, industry analysts said the number of drilling rigs operating in the Denver-Julesburg Basin, one of the country’s larger oil fields, was five, down from 22 at the start of the year.

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Denver-based Extraction Oil and Gas latest producer to file for bankruptcy - The Denver Post
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