Arena Energy files $1B bankruptcy

Arena Energy LP, an offshore oil and gas exploration and production company based in The Woodlands, has filed for bankruptcy with over $1 billion in debt.

Arena petitioned the Southern District of Texas Bankruptcy Court — which is based in Houston — for Chapter 11 protections on Aug. 20. It did so with at least $1.07 billion in debt, according to a declaration to the court by CFO Michael Vallejo.

Arena owns 340,724 net acres along the Gulf of Mexico shelf, Vallejo said in the declaration. Like many other companies in the offshore oil and gas sector, Arena has had to contend with slumping oil prices for the past several years as other companies produce massive crude oil supply out of unconventional onshore production from inland Texas and other regions.

“Such challenges have been exacerbated in recent months by the unprecedented drop in global energy prices and market uncertainty,” Vallejo said in the declaration.

Social distancing as a response to the Covid-19 pandemic has cut deeply into demand for fuels, which also means reduced demand for crude oil. That, combined with uncertainties around potentially rising international supply from Russia and OPEC member states, pressed crude priced deep into record lows earlier this year, and they are still substantially weaker than they were at the start of the year.

Arena employed 57 people when it filed for bankruptcy. The company produced $580.8 million in 2019 revenue, according to court documents.

Arena has been based in The Woodlands since it formed in 1999, but its headquarters moved last year to 2103 Research Forest Drive, the former headquarters building of Chicago Bridge & Iron, which is now called Lake Front North in Hughes Landing.

By Joshua Mann – Senior Reporter

Courtesy of The Houston Business Journal

https://www.bizjournals.com/houston/news/2020/08/21/arena-energy-files-1b-bankruptcy.html