Sabine bankruptcy amid falling oil prices

Eagle Ford

HOUSTON, July 16, 2015 – Exploration and production entity Sabine Oil and Gas has filed for bankruptcy, after failing to establish financial stability following a 2014 merger with Forest Oil. The move follows the most recent drop in oil prices, marking the latest in a series of casualties caused by the global decline in the energy market.

While the company currently controls assets valued around $2.5 billion, it has accumulated around $2.9 billion in liabilities.

“Given the severity of the current market conditions and their impact on the company’s cash flow situation, the company has been unable to right-size its balance sheet through cost-cutting and self-help measures alone,” chief financial officer Michael Magilton said in court papers, as reported by Bloomberg.

After filing Chapter 11 with the US Bankruptcy Court in Manhattan, the company filed an additional lawsuit against creditors in order to recover assets lost as a result of the delayed merger with Forest Oil. A loophole has allowed Forrest Oil to repay bonds, sold at a premium, at face value.

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