Posted on 01/20/2015 5:28:48 AM PST by thackney
A Canadian company that expanded into South Texas in 2012 with a pioneering waterless technique to fracture shale rock has filed for bankruptcy protection as it seeks to reorganize.
The company, GasFrac Energy Services Inc. of Calgary, Alberta, may be the first firm to seek bankruptcy protection among those that established a South Texas presence as drilling in the Eagle Ford Shale boomed.
GasFrac filed Chapter 15 bankruptcy in Canada on Thursday and later that day in federal bankruptcy court in San Antonio. A U.S. Chapter 15 case is ancillary to a primary filing in the debtor’s home country.
GasFrac indicated it has up to 49 creditors and estimated assets of $50 million to $100 million and liabilities of $10 million to $50 million.
GasFrac representatives didn’t return a call requesting comment Monday.
GasFrac, which opened a service center in Floresville in 2012, said in a statement it suffered a cash crunch last year. It cited “continuing negative operating results” as drilling activity has declined with falling oil prices.
The company sought a buyer for its assets or for the corporation as a whole starting Nov. 13, but no suitable offer was made, according to the statement. As a result, GasFrac’s board decided to file for reorganization under Canada’s bankruptcy act, known as the Companies’ Creditors Arrangement Act.
The Canadian court’s initial order provides a stay of certain claims by creditors, the company said.
In addition, on Friday, Ernst & Young LLP, acting as the U.S. representative of GasFrac, asked the San Antonio court for a temporary restraining order to protect the company’s assets and interests of its creditors.
Federal bankruptcy Judge Craig Gargotta granted the request Friday. A hearing on a permanent injunction is set for Jan. 30 in San Antonio.
In the request for a temporary restraining order, a lawyer for Ernst & Young said PNC Bank Canada, the company’s primary secured lender, has agreed to provide interim financing to GasFrac through Wednesday.
GasFrac drew attention in South Texas a few years ago when it introduced its waterless process that used propane gel and liquid petroleum gases to fracture shale. A GasFrac official told the Texas Tribune in 2013 that it fracked its first well in Canada in 2008 and in Texas in 2010, with much of its U.S. work occurring in South Texas.
At the time, about 5 million gallons of water were needed to hydraulically fracture a well in the Eagle Ford. That usage level raised concerns that the region’s water supplies could be threatened, so the company’s technology looked attractive. By spring 2013, it had completed about 100 fracks in Texas, the Tribune reported.
To support its South Texas operations, it built an operations center in Floresville. It began hiring employees in 2012, including drivers, safety technicians, managers and equipment operators.
So it begins: 1982 all over again.
If you lived in Texas and earned your income from oil related businesses you know exactly what I mean.
Yep another round of Rolexes in pawn shops.
This will be worse. These were basically the only decent paying, full time jobs created during one of the worst recoveries and we're loaded with alot of malinvestments that will fall.
Add the fact we are 18 plus trillion in debt and climbing
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