Oilfield service company Seventy Seven Energy will file for Chapter 11 bankruptcy before the end of May.
The firm, which was spun off from Chesapeak Energy Corp in 2014, has entered into a restructuring agreement with lenders which will see it convert about $1.1billion of its debt into equity.
The move comes after the global decline in oil price which has forced about 50 North American oil and gas producers to seek bankruptcy protection.
Chesapeake Energy Corp last week said lenders had allowed it to keep its $4billion borrowing base despite concern about its liquidity position.
Baker Botts LLP is Seventy Seven Energy’s legal counsel and Lazard Freres & Co LLC is the financial adviser. Alvarez & Marsal is the company’s restructuring adviser.