Samson Resources Corp., an oil and natural gas producer controlled by private equity giant KKR & Co., warned investors that bankruptcy may be its best option as collapsing crude prices erode its ability to repay debt.
Filing for Chapter 11 protection “may provide the most expeditious manner in which to effect a capital structure solution,” the Tulsa, Oklahoma-based company said Tuesday in its annual report.
Samson told investors it’s at risk of defaulting on its debts, saying its financial condition raises “substantial doubt” that it can continue as a going concern, according to the filing.
Other producers including Dune Energy Inc., BPZ Resources Inc. and Quicksilver Resources Inc. have also sought bankruptcy protection as a rapid decline in oil prices has led banks to rein in lending, drying up cash for drilling across North America.
Samson, which was acquired by KKR and a group of investors in a $7.2 billion buyout in 2011, hired restructuring advisers in February, including Kirkland & Ellis LLP and Blackstone Group LP, according to the company.
Samson’s $2.25 billion of 9.75 percent notes due in February 2020 dropped to a record low of 21.7 cents on the dollar on Tuesday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. They’ve tumbled more than six cents since March 27.