Cobalt International Energy, Inc. (NYSE:CIE) has filed for Chapter 11 bankruptcy. The oil and gas company, which is financially struggling upstream, said it will sell off the company for parts. Houston, Texas-based Cobalt says it has enough money to fund operations during the restructuring process and will conduct its business as usual.
The bankruptcy petition for Cobalt lists assets of between $1.0 billion and $10.0 billion and liabilities of between $1.0 billion and $10.0 billion.
According to a press release from the company, “Cobalt 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 Cobalt’s assets.”
The press release also stated that “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.”
Filing for Chapter 11 has been the writing on the wall at Cobalt for quite some time now. The company’s operations were focused primarily in Angola, but financial troubles and challenges with the Angolan government forced Cobalt to unload those assets. Its remaining assets were mostly in the Gulf of Mexico. But weak oil prices took their toll on the company.
To combat the downward spiral, Cobalt restructured its balance sheet and raised additional cash. It reduced its debt load by $339.2 million, had a reverse 1-15 stock split, and avoided being delisted from the New York Stock Exchange. The company also reduced its headcount by more than 350 to fewer than 150.
It wasn’t enough though.
In its Q-10 filing with the U.S. Securities and Exchange Commission, for the quarter ended September 30, 2017, Cobalt implied it was going to file for Chapter 11 bankruptcy protection unless it could sell certain of its assets immediately.
“We have concluded that there is substantial doubt about our ability to continue as a going concern…alternatives may include asset sales or liquidity…as well as restructuring some or all of our debt to preserve cash flow which may include seeking private restructuring or reorganization under Chapter 11 of the U.S. Bankruptcy Code.”
In early November, Cobalt reported a net loss of $150.0 million, compared to a third-quarter 2016 net loss of $218.0 million. The company’s revenues increased to $14.4 million from $4.2 million in the third quarter of 2016.
“Cobalt International Energy, Inc. Commences Chapter 11 Cases to Facilitate Restructuring,” Cobalt International Energy, Inc., December 14, 2017.
“Cobalt International Energy, Inc., et al., Case No. 17-36709,” KCC, December 14, 2017.
“Cobalt International Energy, Inc. Announces Third Quarter 2017 Results and Provides Operational Update,” Cobalt International Energy, Inc., November 2, 2017.