Lilis operates in the Permian Basin of West Texas and Southeastern New Mexico.
It has a restructuring agreement with many of its creditors and equity holders, including Varde Partners, the company said in a statement.
Under the agreement, common shareholders would be wiped out. The plan would likely reduce Lilis’ funded debt obligations by more than $34.9 million.
The plan has to be approved by the bankruptcy court.
“The company expects to continue to operate in the ordinary course throughout the restructuring process without material disruption to vendors, suppliers and partners,” Lilis said.
The plan is contingent on Varde providing an equity commitment and additional debtor-in-possession financing. If Varde decides not to do so, or the restructuring plan isn’t pursued, Lilis will sell off its assets, the company said.
Lilis has suffered big time from the decline of oil and gas prices during the coronavirus pandemic.
It has received a commitment from its bank lenders to provide up to $15.0 million in debtor-in-possession financing. The company anticipates up to $5.0 million will be available on an interim basis.
“With the company’s usual operating cash flows, these financings are expected to provide sufficient liquidity for it to continue to operate in the ordinary course through the restructuring process,” Lilis said.
The company’s shares stood at 22.43 cents, down 13.4% in premarket trading, and have plunged 57% over the last year through Friday.