U.S. oil and gas producer Energy XXI, which has operations in Louisiana, Texas and the Gulf of Mexico, said on Thursday it has filed for bankruptcy protection, becoming one of the biggest casualties of the oil rout to date.
The company will eliminate more than $2.8 billion in debt from its balance sheet through the Chapter 11 restructuring, it said in a statement.
Energy XXI’s bankruptcy filing underscores the stress oil and gas companies face as oil prices hover around $40 a barrel, down from above $100 almost two years ago. The company’s break even is at $60 and above.
Energy XXI said last month it was delaying paying the interest due on the debt of one of its subsidiaries, kicking off a 30-day grace period. The company owed about $2.8 billion as of mid-February.
Energy XXI said it has sufficient liquidity, including about $180 million of cash on hand as of March 31, and funds generated from ongoing operations, to continue its operations and support the business during the financial restructuring process.
The company’s shares closed at 65 cents on Wednesday.
The commodities sector overall has struggled since energy and metals prices began to slide in the middle of 2014 as once fast-growing markets such as China and Brazil began to slow. On Wednesday, Peabody Energy, the world’s largest non-government-owned coal producer, filed for U.S. bankruptcy protection in the wake of a sharp fall in coal prices that left it unable to service a recent debt-fueled expansion into Australia. In January, the second-largest coal miner in the U.S. Arch Coal filed for Chapter 11.
The oil industry is having a particularly tough time as the global oil glut and cheap natural gas have depleted prices worldwide. In February, consulting and audit firm Deloitte estimated that about a third of the world’s publicly-traded oil companies are at high risk of going bankrupt this year. Earlier this month, Reuters reported that, thanks to cheap oil, more than 50 North American oil and gas producers—Magnum Hunter Resources, Samson Resources, American Eagle Energy, to name a few—have entered bankruptcy since early 2015.