About a month after Magnum Hunter Resources Corp. said it had hired advisers to help boost the struggling company’s financial position, the oil and gas producer warned that it may be heading toward bankruptcy.
It joins other oil and gas companies reeling from the body blows dealt by plummeting commodity prices — many have announced layoffs, suspended drilling in some areas or sold assets.
In a filing with the U.S. Securities and Exchange Commission this week, Magnum Hunter said seeking protection under Chapter 11 of the bankruptcy code “may be unavoidable.” Magnum Hunter has operations in the Marcellus Shale in West Virginia and Ohio, and the Utica Shale in southeastern Ohio and western West Virginia.
During the first quarter of 2015, the Texas-based company suspended its drilling operations and said it didn’t expect to resume “until our liquidity position has been stabilized.”
Meanwhile, the New York Stock Exchange said Tuesday it would begin delisting the common stock of Magnum Hunter due to “abnormally low” price levels.
NYSE requires that the average closing price be at least $1 per share over a consecutive 30 trading-day period. As of Aug. 26, Magnum Hunter’s average closing price over the previous consecutive 30 trading-day period was 99 cents per share. As of Nov. 6, its average closing price over the preceding 30 trading-day period was 36 cents per share.
Leo Mariani, an analyst for RBC Capital Markets, noted the company had been working on asset sales for months, “but they don’t seem to have anything to show for it.”
The oil and gas market is a difficult place to be right now. “Among public exploration and production companies, most have taken steps to shore up liquidity, and most companies have the ability to weather the storm through 2015,” said Mr. Mariani.
But if prices stay low in the longer-term, it could be trouble for many companies, he said.
This article was written by Stephanie Ritenbaugh from Pittsburgh Post-Gazette and was legally licensed through the NewsCred publisher network.