December 22, 2008 / 5:29 PM / 9 years ago

Oil company Flying J files for bankruptcy

NEW YORK (Reuters) - Flying J, a privately held oil producer, refiner and pipeline operator, filed for Chapter 11 bankruptcy protection on Monday, citing weak oil prices and turmoil in the credit markets.

The company listed estimated liabilities between $100 million to $500 million and assets of more than $1 billion, according to documents filed with the U.S. Bankruptcy Court in the District of Delaware.

“With this sudden and unanticipated inability to meet our liquidity needs, we regret that we had no other choice than a Chapter 11 filing to enable us to stabilize our financial base,” J. Phillip Adams, its president and chief executive, said in a statement.

Flying J had 2007 sales of more than $16 billion from its interests in about 200 oil and gas wells in the Rocky Mountain region, a 70,000-barrels-per-day refinery in Bakersfield, California, a 35,000-barrels-per-day Utah refinery, 250 retail outlets and a 700-mile refined products pipeline owned by its Longhorn Pipeline Holdings unit.

The company does not expect any layoffs as part of the bankruptcy filing.

West Coast refined products traders say the company’s bankruptcy is not likely to affect products supply there.

Oil and gas prices have collapsed from their highs in July, with crude oil shedding more than 70 percent of its value.

Refining margins in the Rocky Mountains and on the West Coast are typically among the highest in the nation due to a lack of regional refining and pipeline capacity.

Over the past four weeks, refiners in the Rockies saw average gross margins of $8.46 per barrel, while West Coast refiners pulled in $13.26 per barrel, according to a research note from Credit Suisse.

That compares to $2.72 per barrel in the refinery and pipeline-heavy Gulf Coast, according to the note.

Among the company’s top creditors were Zions Bancorp (ZION.O), with $85.8 million in outstanding bank loans; ConocoPhillips (COP.N), with $69.4 million in trade debt; and Barry Petroleum, with $26.1 million in trade debt.

Reporting by Matt Daily; additional reporting by Richard Valdmanis and Erwin Seba; editing by Jeffrey Benkoe

Our Standards:The Thomson Reuters Trust Principles.
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