EP Energy Corporation announced that it has voluntarily filed petitions for chapter 11 reorganization in the U.S. Bankruptcy Court for the Southern District of Texas. According to media reports it is the largest oil and gas bankruptcy since 2016.

EP Energy intends to use this process to reduce its debt significantly, strengthen its balance sheet and better position the Company for the long-term. EP Energy remains focused on capital efficiency, operational execution and operating its business in the normal course during the court-supervised process. The Company has received the consent of its lenders to use cash on hand and cash flow generated by the Company's ongoing operations to support the business as it enters the court-supervised process.

According to press reports, Apollo Global Management Inc. and Elliott Management Corp. put forward a bankruptcy plan that would see Apollo hold onto its stake in EP Energy Corp. while cutting nearly two-thirds of its $4.9 billion debt load.

The restructuring plan would see Apollo and Elliott convert their roughly 70% stake in the company’s 1.5-lien notes into 99% of the equity in the reorganized oil and gas company. Those lenders, along with other 1.5-lien holders, would also backstop $325 million of its $436 million equity rights offering at a discount.

President and Chief Executive Officer Russell Parker, said, "This process will allow us to pursue a significant reduction of our debt in order to enhance EP Energy's long-term competitive position. Our business operations are expected to continue without interruption throughout this process, during which we will continue making improvements to our operational execution and capital efficiency. The decision to undertake this financial restructuring follows a comprehensive review by a special committee of independent members of EP Energy's Board of Directors as well as extensive, ongoing discussions with our creditors. The Company has reached an agreement in principle on a comprehensive restructuring with a number of its key creditors, but made the decision that the protection of chapter 11 would help the parties get the deal over the finish line. Over the coming days and weeks, we will continue working with our creditors and stakeholders to propose a plan of reorganization that will considerably strengthen our balance sheet and provide the financial flexibility to continue building our business through the current market environment."

Mr. Parker continued, "Like other companies in our industry, we continue to experience challenging dynamics as a result of depressed commodity prices, and we have been very transparent about our ongoing efforts to actively manage our capital to control spending and preserve liquidity. The EP Energy Board and management team are confident in the strength of our assets and future of our business, and we would like to thank all our employees for their continued dedication. Our entire team is focused on running the company and we are committed to working with our vendors, royalty owners, lessors and business partners just as we always have."

In connection with the chapter 11 filing, the Company has filed a number of customary motions with the Court seeking authorization to support its operations while this process is ongoing, including authority to continue to make payments to lessors and royalty owners in the ordinary course of business, including those payments that were made prior to October 4, 2019. The Company also expects to pay vendors in full for goods and services provided on or after October 4, 2019.