Connacher files for CCAA as Penn West Petroleum Ltd. warns it could default by end of June

, Canada

Penn West CEO Dave Roberts at the company's AGM last week. Penn West says it was in compliance with all its debt covenants as of the end of the first quarter, but the risk of default has created uncertainty about Penn West's ability to continue as a going concern.

CALGARY – Distressed oil prices continued to take their toll on the sector as small oilsands player Connacher Oil and Gas Ltd. Monday filed for creditor protection while another larger player, Penn West Petroleum Ltd., warned it may be in default of its lending agreements by the end of next month.

Increasing numbers of struggling oil and gas companies have been filing for creditor protection in recent months as the oil price rout has dragged on and as banks have conducted scheduled revisions of their borrowing bases.

In a release Monday, oilsands junior Connacher said depressed oil prices and an inability to raise money had forced it to seek protection from its creditors at Alberta’s Court of Queen’s Bench. Connacher filed under the Companies’ Creditors Arrangement Act, which allows financially troubled corporations the chance to restructure their affairs.

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