Bankruptcy Tracker

Goodrich Petroleum Corp Files Chapter 11 Bankruptcy

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In 2014, Goodrich Petroleum had a market cap of $1.2 billion. Above, the Goodrich Petroleum corporate office in Houston, Texas.

The Goodrich bankruptcy illustrates how quickly a company's credit fortunes can change in a commodities-based industry heavily reliant on investment capital.  High debts-to-assets ratio.

Goodrich Petroleum Corp., a $208 million company based in Houston, Texas, filed chapter 11 bankruptcy yesterday in the Southern District of Texas joining a growing number of independent oil and gas companies that have sought court protection since oil prices began to slide in the second half of 2014.  Goodrich joins Quicksilver Resources and Swift Energy as other publicly traded companies to file chapter 11.

In it's bankrupcty filing, Goodrich reported total debts of $507 million and total assets of $99 million for a staggeringly high debts-to-assets ratio of 5.13 driven in large part by an asset impairment of $452 million for 2015, according to the company's most recent 10K filing.  In 2014, Goodrich had the second highest debts-to-assets ratio in the industry at 1.01, as reported by CreditPulse in a February article.

The abrubt fall in oil prices has caused investors to flee in droves placing further stress on the capital-intensive industry.  Goodrich, a company that had a 2.60 score in the 2014 Credit Standards Index (CSI), an index that measures credit standards based on five key criteria with 1.00 being the best and 5.00 the worst, has seen its market capitalization plummet from approximately $1.2 billion as of June 2014 to $107 million as of June 2015.

But, the suddeness with which a company like Goodrich Petroleum can go from being creditworthy one year to bankrupt the next with a solvency ratio of 1.01 when companies such as Revlon and Dominos Pizza have existed for years with much higher debt ratios underscores the volatile nature of commodities-based companies, even those with historically high cash flows such as independent oil and gas explorers.

"The current significant decline in crude oil prices and the continued depressed natural gas prices has negatively impacted the debtor's cash flows that enable them to invest in and maintain their properties and service their long-term obligations," were the major events leading to the bankruptcy, according to a statement in the filing by Robert C. Turnham, Jr., Goodrich Petroleum's president and chief operating officer.

Goodrich's total long term debt is $503 million but the company has a deal in place that would erase $400 million in debt from its books through a swap with a group of investors that own bonds the company issued last year, according to a report in the Wall Street Journal.  Goodrich's bankruptcy deal is similar to those of other struggling oil producers as the energy slump transforms an industry once dominated by Texas oil men into one controlled by financial firms.

Samson Resources and Energy XXI, both privately-held companies, and Sabine Oil & Gas, formerly Forest Oil Corp, which was traded on the OTC market, have also filed bankruptcy since the beginning of 2015.

Fallon Family LP is the largest unsecured trade creditor, according to the bankruptcy filing.  Not much is known about Fallon, which is owed almost a million dollars but is not a shareholder, according to a list provided in the filing.  Fallon's mailing address is a suburban home just west of downtown Houston.