Green Field Energy Services Files for Bankruptcy Protection

On Sunday, Green Field Energy Services, the first ever company to run its hydraulic fracturing equipment on natural gas, filed for bankruptcy protection after failing to pay monthly instalments on two of its loans.

Last month Green Field defaulted on its $80 million loan from Royal Dutch Shell, and this month it defaulted on a $250 million loan from Wilmington Trust. In total Green Field has managed to rack up at least $404 million in debt.

Green Field owns a 50% stake in Turbine Power Technology, which adapts old Chinook military helicopter engines to be used to power hydraulic fracturing pumps. The engines offer the unique ability of being able to run on natural gas, which is much cheaper than diesel, and can be extracted from wells local to the fracking site.

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By adapting helicopter engines Green Field has become the only company able to operate fracking equipment with nothing more than natural gas.

Ted McIntyre, CEO of Turbine Power Technology, stands by a turbine engine from a Chinook helicopter. (Chron)

Enrique Fontova, the President of Green Field, explained that the company has struggled due to the fact that it entered the fracking market at a time when many other competitors were expanding, creating a huge glut in equipment, which far exceeded demand.

“Back in 2011 in this market, the demand far exceeded the supply and margins were much higher, which was how we entered the market. But very quickly the conditions changed to where there was an oversupply.”

Upon entering the market, and in the face of expanding competitors, Green Field attempted to quickly boost their own operations, but this led to a need for large loans, and high costs. Fuel Fix claims that the company grew from just eight fracturing pumps in 2011 to 65 pumps in 2013, but at the same time failed to turn a profit in four of the last five years.

As it has grown its revenues have also increased, from $33 million in 2011 to $183 million so far this year, however overall net losses have risen from $74.6 million to $81.4 million.

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As well as the glut in equipment, natural gas prices also fell, resulting in a fall in the number of wells being drilled, especially in natural gas rich plays. This meant that there was a reduced demand for Green Fields natural gas powered pumps.

Whilst filing for bankruptcy protection in Delaware under Chapter 11 of the US Bankruptcy Code, Green Field stated that after they had begun to expand the market conditions changed for the worse, forcing them to rely on a small group of customers which prevented them from earning the revenues they had predicted.

Mike Moreno, the COE of Green Field, owns 91% with Fontova claiming the remaining 9%.

By. James Burgess of Oilprice.com