Dune Energy has filed for bankruptcy protection in Austin, Texas, becoming the latest oil and gas industry victim of low oil prices.
The Houston-based energy company, with operations in Texas and Louisiana, made the move after a failed merger.
Its Chapter 11 bankruptcy filing – giving it protection from legal action by creditors and space to restructure – was triggered by a sharp drop in revenue and the failed attempt to merge with competitor Eos Petro, according to court filings in Austin, Texas.
Eos backed out of the deal on March 4, Dune said.
Dune will seek court approval to auction its assets, the court filings show. The company listed assets of £152million against debt of £95.5million.
Energy companies worldwide are facing pressure following a sharp drop in oil prices caused by increased production and weakening fuel demand.
Global benchmark crude prices rose in February for the first time in eight months, rebounding from an almost 50% loss in 2014 as US production surged to a 30-year high.
Oil producers, drillers, pipe makers and equipment providers have been stung by a glut of supply from US shale fields, weakening global fuel demand and Saudi Arabia’s refusal to make production cuts.
Before the current slump in prices, US oil averaged more than $90 a barrel for half a decade, ushering in an era of easy lending to wildcat drillers seeking to join the North American energy boom.
When the market tumbled and crude dropped below $45 for the first time in six years, companies burdened by heavy debt loads began to crack.
Dune’s focus has been on rejuvenating long-neglected oil fields discovered by Texaco in the 1930s along the Louisiana coastline.
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