BX Blackstone Inc

Warren Resources Inc., an oil and gas producer that operates in California, Pennsylvania and southwestern Wyoming, filed for bankruptcy protection Thursday after reaching a deal on the terms of a debt-for-equity swap with Blackstone Group's GSO Capital Partners.

In court papers filed in U.S. Bankruptcy Court in Houston, Denver-based Warren said lenders led by GSO Capital will swap $248 million they are owed for an 82.5% stake in the reorganized company. The investment firm has also agreed to provide it with a $130 million bankruptcy-exit loan and an additional $20 million to fund the chapter 11 case.

Junior lender Claren Road Asset Management LLC, a struggling hedge fund owned by Carlyle Group, bondholders and Citrus Energy will divide among themselves the remaining 17.5% stake in the reorganized company.

The restructuring pact, which requires court approval, will form the basis of Warren Energy's chapter 11 plan.

Warren, with about $230 million in assets and $545 million in debts, joins more than 80 North American oil and gas companies that have filed for bankruptcy protection since last year, according to law firm Haynes & Boones.

Although benchmark U.S. oil prices have recently rebounded to more than $40 a barrel since hitting a 13-year low in February, they are still well below the $100 per barrel producers were getting as recently as the summer of 2014.

In the aftermath of the collapse in oil and natural gas prices, the company moved its headquarters to Denver from New York and closed its offices in New York and Roswell, N.M., to reduce expenses. It failed to make a $7.5 million interest payment on Feb. 1.

Warren Resources is slated to make its chapter 11 debut Friday before U.S. Bankruptcy Judge Marvin Isgur in Houston.

Write to Patrick Fitzgerald at patrick.fitzgerald@wsj.com

(END) Dow Jones Newswires

June 03, 2016 01:15 ET (05:15 GMT)

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