Recent Chapter 11 Filings Raise Questions About SandRidge Energy

 | Apr 15, 2016 | 4:17 PM EDT
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It has been a brutal week in the energy space as several companies have filed for chapter 11 protection and the possibility of more filings looms.

Last month, Real Money reported on attempts made by three energy companies to avoid filing for chapter 11 protection. In the last week, two of the named companies -- Energy XXI (EXXI) and Goodrich Petroleum (GDPM)-- filed. Could SandRidge Energy (SDOC) follow their path?

Oklahoma City-based SandRidge delayed filing its 2015 10-K earlier this year because its financial statements were expected to include a paragraph that questioned the company's ability to continue as a going concern. The presence of a so-called "going concern qualification" often puts companies in technical default under some of their debt obligations, which could trigger cross-defaults.

Indeed, when SandRidge ultimately filed its 10-K with the Securities and Exchange Commission on March 30, the company said it retained advisors to help it assess "strategic alternatives," which could include a "private restructuring or reorganization under Chapter 11 of the Bankruptcy Code."

Broadly speaking, SandRidge Energy's problems are not unlike the problems of other companies in the oil and gas space. The company has $3.6 billion in long-term debt and it has deferred interest payments on some of its obligations earlier this year, though it was ultimately able to make payments within the grace period.

The company has also faced other headwinds.

On Friday, SandRidge said, via a filing with the SEC, that it was no longer a "subject or target" of the Justice Department's investigation of violations of antitrust laws involved in the acquisition of land, oil, or natural gas rights.

In March, Aubrey McClendon, the former-CEO of Chesapeake Energy (CHK) was indicted by the Justice Department on bid-rigging charges. The indictment listed an unnamed co-conspirator who was not charged. Bloomberg News reported -- citing sources close to the matter -- that Tom Ward, the former CEO of SandRidge Energy was the alleged co-conspirator. Ward co-founded Chesapeake Energy with Aubrey McClendon.

The end of the investigation may bring some relief to SandRidge, but its financial troubles still lurk.

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