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Law360 (July 20, 2020, 11:18 AM EDT ) Fracking company BJ Services filed for Chapter 11 protection in Texas bankruptcy court on Monday with over $500 million in assets and liabilities, citing volatility in energy markets and COVID-19's effect on demand.
BJ Services LLC and three affiliates filed their petitions in the Southern District of Texas. BJ Services, which counts energy technology company Baker Hughes as one of its major shareholders, provides hydraulic fracturing of shale wells to upstream oil and gas companies.
Commodity markets and the pandemic led to a cash crunch at the company, President and CEO Warren Zemlak said in a statement.
"The industry continues to face unprecedented uncertainty caused by volatile commodity markets and significantly reduced demand due to the COVID-19 pandemic," Zemlak said. "The severe downturn in activity and subsequent lack of liquidity resulted in an unmanageable capital structure."
The company has a presence in the U.S. and in Canada, and its Canadian affiliate is seeking corresponding protections in Canada in order to wind down operations, BJ Services said in a Monday press release.
BJ Services said it is working with lenders to secure enough cash to fund the planned asset sales and wind-down.
Numerous energy companies have sought bankruptcy protection in recent weeks as the pandemic and energy price shocks take their toll on the industry. Oil and gas driller Bruin E&P Partners LLC filed for Chapter 11 on Friday with an $840 million debt-swap plan, the day after California Resources Corp. filed for bankruptcy with over $6 billion in debt.
Fracking services companies haven't been spared either, with fracking logistics business Hi-Crush Inc. filing for Chapter 11 last week and fracking sand firm Vista Proppants and Logistics LLC hitting Chapter 11 in June.
BJ Services is represented by Jason S. Brookner, Paul D. Moak and Amber M. Carson of Gray Reed & McGraw LLP and by Joshua A. Sussberg, Christopher T. Greco, Samantha Lawrence and Joshua M. Altman of Kirkland & Ellis LLP.
PJT Partners acted as BJ Services' investment banker and financial adviser; Ankura Consulting Group LLC is acting as restructuring adviser; and Simmons Co. is acting as adviser in the sale of the cementing business.
The case is In re: BJ Services LLC, case number 20-33627, in the U.S. Bankruptcy Court for the Southern District of Texas, Houston Division.
--Additional reporting by Rick Archer and Vince Sullivan. Editing by Alyssa Miller.
Update: This story has been updated with more details from the filing.
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