Sabine Oil and Gas, the newly created entity from the merger of Sabine Oil and Gas and Forest Oil, announced in a tersely worded statement yesterday that it is not going to file its requisite SEC quarter/year end forms and has hired an investment bank and law firm to help it assess its "strategic alternatives." Ideally, that means seeking new financing for the company. In reality, it means hunting for a white knight to save it from having to declare bankruptcy.
Each independent E&P has devised its own strategy to survive low gas prices and, for most, an ill-timed rush to oil and liquids. All are cutting costs and limiting drilling and completions. Some are selling assets. Some are able to restructure their debt to push back maturities (i.e. SM Energy), others have to sell some expensive debt to replace cheaper debt that is maturing soon (i.e. Goodrich). Others are selling equity to pay off debt (i.e. Encana and Goodrich), telling their shareholders it's going to save them on interest payments while not mentioning the dilution in equity value. The least fortunate are looking for a savior or a sucker. Investors with dry powder are licking their lips hoping to snap up some good assets on the cheap.
These days, there are many vultures in the skies above Houston. But Sabine, ask not for whom the vultures circle, they circle for thee.