SandRidge Energy filed for Chapter 11 bankruptcy protection on Monday, a move that could set back efforts to develop oil and gas reserves in Colorado's North Park Basin.
The Oklahoma City petroleum producer moved into Colorado late last year when it paid $190 million cash for the North Park holdings of Boulder-based EE3.
The sale went through and SandRidge deployed an oil and gas rig early this year, the first the area had seen since 2014, when Bonanza Creek and EOG Resources stopped drilling.
"The North Park in general is not an area that competes well at current prices, and even before the price collapse there was only a little bit of activity," said Bernadette Johnson, a managing partner at Ponderosa Advisors in Denver.
Johnson said her data shows that the lone horizontal drilling rig in the basin was idled in early April. But a Jackson County official said that SandRidge crews were frequenting restaurants and motels in Walden.
Among the first-day motions the company made in its prepackaged Chapter 11 bankruptcy filing was to continue day-to-day operations and pay employees, royalty and working interest owners, vendors and suppliers and lienholders.Advertisement
The company reported $7 billion in assets and $4.1 billion in debt. Of that debt, the company has asked creditors to convert $3.7 billion into equity. Should the court approve, the company said it expects to see minimal disruption in its day-to-day operations.
"The new capital structure will allow the company to concentrate on oil and gas exploration and development in our active Oklahoma and Colorado project areas," James Bennett, SandRidge's president and CEO, said in a statement
SandRidge focused on "off-Broadway" petroleum plays like the Mississippian Lime in Kansas, and the North Park in Colorado, where it holds 136,000 net acres and more than 1,300 potential drilling sites.
The oil-bearing Niobrara formation, heavily drilled in the Denver-Julesburg Basin in Weld County, also extends under Jackson and Routt counties. Some early wells drilled in 2013 proved promising.
But at an altitude of 8,800 feet, and lacking pipeline connections and other infrastructure, developing the area has proven challenging.
Environmental groups and outdoor activists opposed the U.S. Bureau of Land Management when it offered leases in the wildlife rich area that serves as the headwaters of the North Platte River.
In May 2012, regulators found that an oil spill was hurting Spring Gulch Creek.
Bonanza Creek, which holds the second largest land position in the basin, has put drilling plans there on the back burner.
Aldo Svaldi: 303-954-1410, firstname.lastname@example.org or @aldosvaldi
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