HOUSTON (Reuters) - Blackstone Group's (N:BX) Gavilan Resources LLC filed for Chapter 11 bankruptcy late on Friday, citing this year's oil price collapse and a bitter legal battle with a partner.
Formed following the $2.3 billion acquisition of Texas shale oil properties in 2017, Gavilan listed secured debt of more than $550 million in its filing in U.S. Bankruptcy Court in Houston.
It plans to sell its assets, according to the filing. It has hired investment banker Lazard (NYSE:LAZ) Freres & Co and named attorneys Weil, Gotshal & Manges and Vinson & Elkins as bankruptcy advisers.
Oil prices this year are off more than 60%, hurt by a collapse in demand for fuels due to coronavirus-related lockdowns and a market glut spurred by shale and a battle for market share among the world's top producers.
Gavilan's bankruptcy comes amid an "increasingly unworkable relationship" with partner Sanchez Energy Corp, the filing said. The pair acquired 155,000 acres in Texas' Eagle Ford Shale oil field from Anadarko Petroleum (NYSE:APC).
Blackstone declined to comment.
Gavilan and Sanchez have been embroiled in a lawsuit over the development and ownership of the properties. That lawsuit is set to resume May 22.
Sanchez also filed for Chapter 11 last year blaming low prices and the more than $2 billion in debt it took on to help it grow through acquisitions. Its restructuring plan has been confirmed but is not yet effective, the court filing said.
This year's oil-price collapse has led debt-laden shale producers including Occidental Petroleum (NYSE:OXY) and Chesapeake Energy (NYSE:CHK) to seek to restructure their loans. In April, Whiting Petroleum (NYSE:WLL) became the largest shale bankruptcy since the coronavirus pandemic cut demand.