Breitburn Energy Partners LP, a Los Angeles company that specializes in revitalizing old oil wells, has filed for Chapter 11 bankruptcy protection.
In a statement released Monday, the company said the continued decline of oil and natural gas prices has made Breitburn's existing debt burden "unsustainable," though the company's portfolio of diverse assets "continues performing in line with our expectations."
"Taking this action now gives us flexibility in maximizing the value of the ongoing business," Breitburn Chief Executive Hal Washburn said in a statement.
Breitburn said it expects to continue operating without interruption and will have enough liquidity to fund its restructuring process through a combination of money from its operations, cash on hand and $75 million in debtor-in-possession financing.
The company has been publicly traded since 2006.
This month, the company reported first-quarter oil, natural gas liquids and natural gas sales revenue of $105.5 million, down from $139.7 million in last year's first quarter. The company attributed the decline to lower realized oil and natural gas prices.
Two years ago, crude oil was trading at about $100 a barrel. Since then, global oil production has outpaced demand and, more recently, China's economic problems have put added pressure on prices. Crude fell below $30 a barrel earlier this year, and although prices since recovered somewhat, they are still below $50.
As Breitburn works through its restructuring, the company may need to take another look at its core business of revitalizing old oil fields, said Carl Larry, director and principal consultant for oil and gas at the Frost & Sullivan consulting firm.
When oil prices rebound, the numerous wells that have been capped or shut down could just be re-opened for production, which narrows the market for revitalization of old wells.
Moreover, recapturing oil from old wells is increasingly seen as an old technique, Larry said. To follow the market, Breitburn might want to use its current technology to make oil production from existing wells more efficient.
"They've been a successful company," Larry said. "The oil industry is full of people who have learned to adapt when prices go up and prices go down. I think it's possible that they can restructure and refocus. But there's a lot more competition out there."
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2:15 p.m.: This story has been updated to include an analyst's comments on the company's future.
This article was first published at 10:28 a.m.