BX Blackstone Inc

By Patrick Fitzgerald 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (May 18, 2020).

Gavilan Resources LLC, an oil-and-gas company formed by buyout firm Blackstone Group Inc., has filed for bankruptcy protection, a victim of the collapse in energy prices and a long-running commercial dispute with a rival Texas shale driller.

The Houston-based company Friday night sought protection from creditors under chapter 11, prompted by the "precipitous decline in oil prices from the combined effect of the Covid-19 pandemic and the flooding of oil markets by warring international producers," namely Russia and Saudi Arabia, David E. Roberts, Jr., Gavilan's chief executive, said in papers filed with the U.S. Bankruptcy Court in Houston.

Mr. Roberts also blamed Gavilan's financial difficulties on "an increasingly unworkable relationship" with Sanchez Energy Corp., a rival Texas oil-and-gas company that filed for bankruptcy last year.

Since the fall of 2018, the two companies have been sparring over the rights to oil and gas acreage in the Eagle Ford Shale in Texas they jointly acquired from Anadarko Petroleum Corp. for $2.3 billion.

Gavilan is putting its assets on the bankruptcy-auction block while continuing its legal fight with Sanchez over the Eagle Ford rights, Mr. Roberts said.

Sanchez and Gavilan have each accused the other of defaulting on a joint development agreement to operate the oil and gas assets they acquired. Gavilan has alleged that Sanchez deviated from an agreed-upon work plan for at least 20 wells and then refused to divide up the assets, a claim Gavilan disputes.

Representatives for Sanchez couldn't be reached for comment Saturday.

Formed in 2017 with Blackstone money, Gavilan buckled under pressure from the meltdown in U.S. oil prices, which have rebounded since hitting a 21-year low of $11.57 a barrel last month.

That rebound in prices proved too late for Gavilan, which The Wall Street Journal had reported in March was preparing for a bankruptcy filing.

More than 200 oil and gas drillers have filed for bankruptcy since prices nosedived five year ago, according to Texas law firm Haynes & Boone LLP. But the coronavirus pandemic, coupled with a global glut of oil supply, is pushing more companies to the brink. Ultra Petroleum Corp., Whiting Petroleum Corp., Southland Royalty Co. and Sheridan Holding Company I LLC are among the oil and gas drillers that have filed for bankruptcy this year.

Gavilan's bankruptcy advisers include Lazard Ltd. and law firms Weil Gotshal & Manges LLP and Vinson & Elkins LLP. Bankruptcy Judge David R. Jones has scheduled an initial hearing in the case, number 20-32656, for Monday in Houston.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

(END) Dow Jones Newswires

May 18, 2020 02:47 ET (06:47 GMT)

Blackstone (NYSE:BX)
Historical Stock Chart
Von Mär 2024 bis Apr 2024

Blackstone (NYSE:BX)
Historical Stock Chart
Von Apr 2023 bis Apr 2024