(Reuters) – Lonestar Resources US Inc LONE.O has filed for Chapter 11 bankruptcy protection, joining Oasis Petroleum and several other energy companies that have been hit by depressed crude prices and dismal fuel demand due to the COVID-19 pandemic. The pandemic has added to the woes of already struggling producers, and Chapter 11 bankruptcy filings by oil and gas companies are currently ahead of the 2019 numbers.
Lonestar said on Thursday it filed for bankruptcy after defaulting on two debt payments. As of June 30, the company had total debt of $546.3 million.
Last month, it entered into an agreement with creditors to eliminate about $390 million of debt by converting some of it to equity. It had assets and liabilities in the range of $500 million to $1 billion, according to a court filing from Wednesday.
Oasis Petroleum Inc OAS.O also filed for chapter 11 bankruptcy protection on Tuesday, after missing interest payment on its debt last month.
Industry experts expect more companies to file for Chapter 11 before the year is over.
Gas producer Gulfport Energy Corp GPOR.O, which has hired a debt restructuring adviser to reduce its roughly $2 billion debt pile, has interest payments on its debt due on Oct. 15, Nov. 1 and Nov. 15.
Missing interest payments on debt can often be a trigger point for companies to file for bankruptcy. Alternatively, they can enter a 30-day grace period to make the payment.
The upcoming biannual review of how much money energy companies can borrow against the value of their oil and gas reserves can also push some of the smaller companies, already struggling to find other methods of financing, into bankruptcy.
Reporting by Aishwarya Nair and Shruti Sonal in Bengaluru; Editing by Shounak Dasgupta, Bernard Orr and Shinjini Ganguli