BY Richard Summerfield
Fracking pioneer BJ Services has filed for Chapter 11 bankruptcy protection in the US, amid a severe downturn in oilfield services demand. The company had been in discussions to sell its cementing business, and a portion of its fracking operations.
As part of the bankruptcy process, the company will now look to wind down its operation. BJ Services’ executive team has spent the past few weeks working to avert the bankruptcy and wind down, and the company is still in talks with lenders trying to secure funding for the Chapter 11 process, according to a press release announcing the filing.
Regardless of the company’s efforts, it filed for Chapter 11 in the bankruptcy court for the Southern District of Texas, listing assets and liabilities in the range of $500m to $1bn. The company also said it is seeking additional funding to see it through the asset sale and wind-down process. Meanwhile, it is working to minimise the disruption to current projects and reaching out its clients to cover various options.
“The industry continues to face unprecedented uncertainty caused by volatile commodity markets and significantly reduced demand due to the COVID-19 pandemic. Despite maintaining a leading market position and strong client support, the severe downturn in activity and subsequent lack of liquidity resulted in an unmanageable capital structure,” said Warren Zemlak, president and chief executive of BJ Services.
He continued: “After exhausting every possible alternative to address these issues and improve our liquidity, we have made the very difficult decision to proceed with a Chapter 11 process. Our Board of Directors and the entire management team worked diligently over the course of the past several weeks to avoid this outcome. Having said that, we are pleased to be in discussions with interested bidders for our cementing business and for certain portions of our fracturing business and technology.”
BJ Services was a leading provider of hydraulic fracturing services in the formative days of the US shale revolution. It was acquired in 2010 by Baker Hughes for $6.8bn. In 2017, Baker Hughes formed a joint venture to operate BJ Services’ pressure-pumping and cementing businesses. The deal involved selling 53 percent of the company to oil-services-focused CSL Capital Management and an energy division of Goldman Sachs for $325m.