BPZ Resources files for bankruptcy as oil price plunge claims another victim

March 9, 2015, 11:41 PM UTC
High Oil Prices Continue To Drive Gas Prices Steadily Upwards
CULVER CITY, CA - APRIL 25: Oil rigs extract petroleum as the price of crude oil rises to nearly $120 per barrel, prompting oil companies to reopen numerous wells across the nation that were considered tapped out and unprofitable decades ago when oil sold for one-fifth the price or less, on April 25, 2008 in the Los Angeles area community of Culver City, California. Many of the old unprofitable wells, known as "stripper wells", are located in urban areas where home owners are often outraged by the noise, smell, and possible environmental hazards associated with living so close to renewed oil drilling. Since homeowners usually do not own the mineral rights under their land, oil firms can drill at an angle to go under homes regardless of the desires of residents. Using expensive new technology and drilling techniques, California producers have reversed a long decline of about 5 percent annually with an increased crude flow of about 2 1/2 million barrels in 2007 for the first time in years. (Photo by David McNew/Getty Images)
Photograph by David McNew—Getty Images

Another oil company is stuck in the tar.

BPZ Resources said Monday that it has filed for Chapter 11 protection as the Houston-based oil and gas company became just the most recent energy industry company to end up in bankruptcy after months of falling oil prices. Crude prices have tumbled by nearly half since the summer, creating shockwaves of layoffs, acquisitions and declining drilling activity across the industry.

In a statement on Monday, BPZ (BPZR) CEO Manolo Zuniga blamed his company’s predicament on “the industry downturn” as well as BPZ’s inability to find a way to refinance its debt. “Our efforts to negotiate additional financing to fund business activities and pursue identified strategic alternatives were further impeded when oil prices plummeted and production growth faltered, creating additional obstacles to our restructuring efforts,” Zuniga said in a statement.

Earlier this month, BPZ announced that it would seek a grace period to put off paying $60 million owed to its bondholders. The grace period for the principal on that debt was due to expire Tuesday.

Dune Energy (DUNR), another Houston-based oil company, filed for bankruptcy protection Sunday. In its filing, Dune also cited falling oil prices as being a factor in the company’s bankruptcy, which came after the proposed purchase of Dune by Eos Petro fell through due to the energy market’s downturn.

BPZ, which lost more than $40 million in its most recent fiscal quarter, said Monday that its business will continue to operate while under the protection of the federal bankruptcy court. BPZ’s shares are currently worth about 6 cents each after trading for more than $3 each before oil prices began to dip last June.