Petro-Lewis Corp. Says It’s in Default on Debt Payments

Petro-Lewis Corp., a loss-ridden oil and gas drilling concern, said Friday that it is in default on some debt payments and is considering filing for Chapter 11 bankruptcy protection.

The company, one of the nation’s largest oil and gas drillers, with revenue of $176.1 million in its latest fiscal year, has decided to omit the semiannual interest payment on senior debt that was due Nov. 1 in order to conserve cash. The payment suspension on the 15.75% notes due in 1994 will trigger cross-defaults in other public securities and its bank credit agreement.

Petro-Lewis also said its bankruptcy counsel has started to prepare a plan of reorganization in contemplation of a possible Chapter 11 bankruptcy filing.

“A filing depends on whether (our) creditors take action or if we decide to file. On a day-by-day basis, we’re seeing what happens,” a company spokesman said.

Petro-Lewis, a leading oil and gas driller, has been devastated by the slump in world energy prices, losing $415.6 million in the year ended June 30. The loss included a $388-million writedown of oil and gas properties.

One of its major creditors is a unit of Freeport McMoran Co., a New Orleans natural resources concern that holds 80% of Petro-Lewis’ debt. Freeport McMoran has extended a $750-million tender offer for Petro-Lewis’ common and preferred stock until Dec. 23.

A spokesman for Freeport McMoran said the company was not yet sure what course of action to take with regard to Petro-Lewis.

If Freeport is unable to buy the remaining debt securities on the open market at acceptable terms and Petro-Lewis is unable to pay its obligations, then Freeport will have to act to protect its interests, the spokesman said. That may result in forcing Petro-Lewis into bankruptcy, he added.

Freeport and Petro Lewis set a definitive agreement for a plan of reorganization in October in the event of a Petro-Lewis Chapter 11 filing.