Seventy Seven Energy

Seventy Seven Energy (SSE) is the former Chesapeake Oilfield Operating company, the oilfield services subsidiary of Chesapeake Energy that Chessy spun out into its own company in July 2014 after it couldn’t find anyone to buy it (see Long Labor & Delivery: Seventy Seven Energy Born Yesterday). It was an ill-fated venture from the beginning. SSE never turned a profit after becoming its own company. In June 2016, SSE, which has major operations in the Marcellus/Utica, filed for bankruptcy, then emerged from bankruptcy two months later borrowing $100 million (see Seventy Seven Energy Pops Out of Chapter 11 Bankruptcy in 2 Mos.). In the third quarter of last year, the red ink continued to flow, with SSE losing $36.5 million. SSE finally had enough and threw in the towel. In December, Patterson-UTI Energy, another oilfield services company with major operations in the northeast, cut a deal to buy out and merge in SSE in an all-stock deal worth $1.76 billion (see Seventy Seven Energy Throws in the Towel, Sells to Paterson-UTI). However, that deal is not yet done and won’t be until mid-year this year. In the meantime, SSE has just released its fourth quarter and full year 2016 update. And yes, the red ink continued to flow, although not was fast as it was…
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In August MDN reported that oilfield services company Seventy Seven Energy (SSE), the former Chesapeake Oilfield Operating company, had popped out of bankruptcy in record time–just two months after declaring bankruptcy (see Seventy Seven Energy Pops Out of Chapter 11 Bankruptcy in 2 Mos.). The bankruptcy reduced more than $1 billion worth of debt by waving a magic wand and turning debt into equity (shares of stock)–hosing existing stockholders. SSE’s second quarter report reflects the pre-bankrupt company and showed they lost $84.5 million in 2Q16, compared to losing $74.7 million in 2Q15 (see Seventy Seven Energy 2Q16: Shed $1B Debt, Lost $84.5M). SSE has just released their 3Q16 update, which is the first update since they magically wiped away $1 billion in debt. What does it show? It’s complicated, since there is the pre-bankrupt financials and post-bankrupt financials. The bottom line is that the company is still losing money. If you look at just the two months since emerging from Chapter 11, SSE lost another $36.5 million. The company reports they currently have 29 rigs operating with another 22 rigs under contract…
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Earlier this month MDN reported that oilfield services company Seventy Seven Energy (SSE), the former Chesapeake Oilfield Operating company, had popped out of bankruptcy in record time–just two months after declaring bankruptcy (see Seventy Seven Energy Pops Out of Chapter 11 Bankruptcy in 2 Mos.). The bankruptcy reduced more than $1 billion worth of debt by waving a magic wand and turning debt into equity (shares of stock)–hosing existing stockholders. We also reported SSE was cleared to borrow another $100 million (go figure). Last week SSE released their second quarter 2016 update. It shows the company lost $84.5 million in 2Q16, compared to losing $74.7 million in 2Q15. Here’s the SSE 2Q16 update…
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Getting a pre-packaged bankruptcy to go is about as fast as getting a Happy Meal at the McDonald’s drive-thru. Relatively speaking, of course. Bankruptcies usually take many months, often years, before a company emerges to fight another day. Not so with the pre-packaged variety. Seventy Seven Energy (SSE), the former Chesapeake Oilfield Operating company, filed a bankruptcy plan just two months ago (see Seventy Seven Energy Officially Files for Prepackaged Bankruptcy). Last month we reported SSE would soon exit bankruptcy, borrowing another $100 million (see Seventy Seven Energy Cleared to Exit Bankruptcy, Borrowing $100M!). Yesterday SSE reported they have emerged, waving the magic wand and turning $1.1 billion of debt into equity. SSE’s previous stockholders are now completely hosed, and the new stockholders (former debtholders) are holding their breath…
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In June MDN told you that Seventy Seven Energy (SSE), the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago, filed a “pre-packaged” bankruptcy plan that screws shareholders by devaluing their shares to worthless status and converting the company’s considerable outstanding debts into new shares of ownership (see Seventy Seven Energy Officially Files for Prepackaged Bankruptcy). In a little over a month, the judge assigned to case has approved that plan, along with a plan for SSE to borrow an additional $100 million. Wait, what?? The company just converted a boatload of debt into equity (bonds and IOUs into shares of stock), and they turn around and borrow ANOTHER $100 million! Yep. That’s what’s happening…
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In May MDN told you that Seventy Seven Energy (SSE), the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago, was planning to screw shareholders by devaluing their shares to worthless status and converting the company’s considerable outstanding debts into new shares of ownership (see Seventy Seven Energy Makes Progress in “Pre-Packaged” Bankruptcy). It’s called a “pre-packaged” bankruptcy–where a company cuts a deal with note holders (those who hold IOUs) to convert the debt into equity. Magnum Hunter Resources did it to their shareholders (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). A number of other companies with operations in the Marcellus/Utica are also trying it, including Warren Resources, Halcon Resources, Penn Virginia and Ultra Petroleum. A couple of others are on the cusp of doing it: Stone Energy and EXCO Resources. SSE announced yesterday they have all of their ducks in a row with debt holders and they have officially filed for their “pre-packaged” bankruptcy…
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The process of screwing over existing stockholders in favor of debtholders continues at Seventy Seven Energy (SSE). In April, MDN told you that SSE–the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago–was ordering up one prepackaged bankruptcy to go (see Seventy Seven Energy Filing for Bankruptcy, Converting Debt into Stock). Following the path of other oil and gas-related companies, SSE plans to convert existing debt into equity–turning IOUs into shares of stock. Magnum Hunter Resources just completed the process of doing the same thing and had now emerged from bankruptcy (see Magnum Hunter Emerges from Bankruptcy with CEO Gary Evans Gone). Everybody is sort-of happy under that scenario–except the original stockholders who see the value of their shares of stock turned into toilet paper. They become worthless. (Note to self: Always buy bonds in the future!) SSE continues their march toward renegotiating with existing noteholders, as they announced last Friday…
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Last week Seventy Seven Energy (SSE)–the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago–announced it would soon declare bankruptcy (see Seventy Seven Energy Filing for Bankruptcy, Converting Debt into Stock). The message was “Don’t worry, this will be a quick and relatively painless bankruptcy.” Painless for everyone except existing common stockholders who will see the value of their stock plummet. But we digress. We can see why they announced the bankruptcy last week because yesterday SSE released their first quarter 2016 financial and operating results. Revenue plummeted by 64% in 1Q16 over 1Q15 (and down 19% from 4Q15). The company lost $59.5 million in 1Q16. CEO Jerry Winchester said (our words) given that all the wheels have come off the drilling cart, SSE’s 1Q16 performance wasn’t all that bad. Here’s the announcement (take some Alka Seltzer before reading it if you’re an investor in SSE)…
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“We’ll take one prepackaged bankruptcy to go.” That was the upshot of an announcement yesterday from oilfield services company Seventy Seven Energy (SSE)–the old Chesapeake Oilfield Operating unit that was spun into its own company a few years ago. In February MDN reported that for 2015 SSE revenue was down 45% and the company lost $221 million (see Seventy Seven Energy 2015: Revenue Down 45%, $221M Loss). In January SSE was threatened by the New York Stock Exchange with de-listing its stock (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE). One of SSE’s ongoing problems is that Chesapeake Energy, itself not in all-that-great-a-shape, provides nearly three-fourths (70%) of SSE’s revenue. In January SSE hired the “restructuring” experts at Lazard Freres to figure out how to stay in business (see Seventy Seven Energy Hires Turnaround Expert, Hopes to Stay Afloat). Their solution, as we learned yesterday, is a prepackaged bankruptcy where SSE gets the vast majority of debtholders to agree to converting the debt into stock ownership in the company. So SSE is giving away much of the company to its current debtors, hoping they can keep the doors open…
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Last week MDN told you that Seventy Seven Energy, the old Chesapeake Energy Oilfield Operating unit that was spun into its own company a few years ago, had released some selected 2015 financial numbers with no context (see Seventy Seven Energy Releases Cherry-Picked Numbers). Which led us to speculate, “It must be worse at oilfield services company Seventy Seven Energy (SSE) than we thought.” SSE released their fourth quarter and full year 2015 financials yesterday, and our speculation was spot on. SSE lost $221 million in 2015 (with $61 million of that loss coming in 4Q15). In 2014 SSE had $2 billion in revenue. In 2015, they had $1.1 billion in revenue–nearly cut in half. Which we suppose should not come as a surprise, that a company which supplies the rigs and people to drill and frack has seen business disappear since energy companies pulled way back in 2015. Still, you have to wonder how long they can hold on with losses like this. SSE has a large operation in the Marcellus/Utica, which is why we track them. Below is SSE’s 4Q15 and full year 2015 update…
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It must be worse at oilfield services company Seventy Seven Energy (SSE) than we thought. The former Chesapeake Energy Oilfield Operating unit that was spun into its own company a few years ago. In January SSE announced they had hired a turnaround expert (see Seventy Seven Energy Hires Turnaround Expert, Hopes to Stay Afloat). Not long after that, also in January, the New York Stock Exchange threatened the company with delisting (see Seventy Seven Energy’s Stock Threatened with Delisting from NYSE). Although third quarter 2015 results were bloody, it seemed to us the situation was improving at SSE (see Seventy Seven Energy 3Q15: Still Losing Money, But Not as Much). However, SSE has just released a preliminary fourth quarter and full year 2015 update–and the update is nothing more than a few cherry-picked facts and figures. No financials. No updates for their various divisions. No context at all. Just a few facts and figures plucked to make the company look as good as it possibly can–until the other shoe drops when they have to release their financials…
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