The end may be nearing for BJ Services
150-year-old energy firm files for Chapter 11 as financial deal collapses at last minute
A financial deal that “fell apart on the one-yard line” could bring an end to a 150-year-old Houstonarea energy firm and force 1,250 employees out of work, court filings show.
Tomball-based BJ Services filed for Chapter 11 reorganization Monday in U.S. Bankruptcy Court in Houston, despite an effort by private equity firm CSL Capital Management, one of the company’s three owners, to invest $75 million, records show.
“The proposed transaction was nearly final, but fell apart on the one-yard line as the last remaining issues could not be resolved,” CEO Warren Zemlak wrote in the filing.
BJ Services, which is privately held, owes about $357 million and has laid off 800 employees since March and furloughed 200, court records show.
U.S. Bankruptcy Judge Marvin Isgur is scheduled to hear the case Tuesday afternoon.
BJ Services is asking Isgur for seven days to save its failed refinancing deal. If the company fails to reach a deal with investors and lenders in Chapter 11 proceedings, the company would sell all of its assets and lay off its remaining workers, said Sarah Foss, an energy industry bankruptcy expert with financial service Debtwire.
“It would be tragic for a company that has been around since the 1870s and all those people,” Foss said. “It would also become one of
the largest oil and gas liquidations this year.”
BJ Services is working with its customers to keep crews operating at active sites until buyers for its business units are found.
In a deal that would save 300
jobs but wouldn’t close for several weeks, an disclosed buyer offered to buy the company’s oil well cementing business for more than $30 million, court records show.
In a separate deal, CSL offered to buy three fracturing fleets, the company’s Titan series of equipment and all intellectual property saving another 215 jobs, records show.
Founded by mining equipment maker Byron Jackson in 1872, BJ Services became a private company in 2016 under a deal that ended with CSL Capital Management and New York private equity firm West Street Energy Partners owning 53.3 percent and Houston oil-field services giant Baker Hughes the remaining 46.7 percent.
Some 18 oil-field services companies with a combined $28.6 billion of debt had filed for bankruptcy in the U.S. through June, according to law firm Haynes and Boone.
Michelle Michot Foss, an energy industry expert with Rice University’s Baker Institute, said the filings are just the beginning for the struggling oil-field services sector, which was in trouble before the coronavirus pandemic.
The sector, which ranges from drilling rig operators to hydraulic fracturing crews to equipment manufacturers, was hit with billions of dollars of losses during the 2014-16 oil crash and again last year when oil prices were stuck under $60 a barrel.