Oklahoma City-based oil and gas exploration and production company Chaparral Energy Inc. has reached a short-term forbearance agreement with its lenders, buying the privately held company more time to complete negotiations with its lenders, while it analyzes various strategic alternatives.

“We are in the process of analyzing various strategic alternatives to address our liquidity and capital structure, including strategic and refinancing alternatives through a private restructuring, assets sales and a filing under Chapter 11 of the U.S. Bankruptcy Code,” the company said.

Chaparral said its lenders agreed to forbear their right to call overdue senior notes, but only until April 15.

In its annual report filed last week, the company, which acquires and develops oil and natural gas properties in Oklahoma, Texas and Kansas, said that it may seek Chapter 11 bankruptcy, as it was unable to make an interest payment due April 1 tied to a $300 million bond. The company had missed a $16.5 million interest payment due March 1, kicking off a 30-day grace period.

The company’s independent auditors expressed “substantial doubt” over the company’s “ability to continue as a going concern,” which further prompted its loans to be considered in default.

Chaparral said it owed $1.6 billion as of the end of 2015. The company borrowed another $141 million in February, maximizing its credit limit. The company said it had $176 million in cash as of March 30.

“If we are unable to reach an agreement with our creditors prior to any of the above described accelerations, we could be required to file for protection under Chapter 11 of the U.S. Bankruptcy Code,” Chaparral said last week according to The Oklahoman.

Like many producers, Chaparral uses unproduced oil and natural gas in the ground as collateral for its loans. Lower commodity prices have reduced the value of the collateral, cutting the amount the company can borrow. Chaparral’s credit lines are set to be re-evaluated on May 1.

Should Chaparral file for bankruptcy, it would be joining about 40 other energy companies that sought court protection from their creditors last year as oil prices plunged, said Reuters. Consulting firm Deloitte said that figure could balloon to 175 this year.

Chaparral lost $1.3 billion in the year ended Dec. 31, and has about $1.6 billion in debt, according to its annual report. The company drew down the balance on its $548 million revolving line of credit in February. The lenders will re-determine the credit facility May 1, and Chaparral expects its borrowing base will be decreased significantly, it said in its annual report. The company will then have to repay the outstanding balance within 30 days or in six monthly installments, Reuters added.

Chaparral Energy was co-founded almost 30 years ago by chairman and CEO Mark Fischer, who began his career with Exxon (NYSE: XOM) in 1972 in the Permian Basin of West Texas, and subsequently served as a drilling, production and operations manager at various other exploration companies. Chaparral has grown to become a major player in the U.S. Mid-Continent region, with more than 1 billion barrels of oil equivalent (Boe) and almost 400 employees. The company is based in Oklahoma City, Oklahoma.

The Mid-Continent is a key component of America’s energy production. There are significant U.S. onshore oil and gas producing basins here with a deep history of successful exploration and development, and within these basins are multiple levels of stacked pay opportunities. “These provide a target-rich environment for our operations both now and for decades to come,” the company says. “Through skillful application of technology, including horizontal drilling and multi-stage fracture stimulation, and by leveraging our EOR experience, Chaparral’s operations in the Mid-Continent can reinforce America’s energy independence.”

Chaparral Energy says it is the third-largest oil producer in Oklahoma and the third-largest EOR operator in the U.S. in terms of the number of active projects, with more than 425,000 net surface acres in the Mid-Continent, much of which includes stacked-pay opportunities. The company has a significant inventory of repeatable drilling opportunities with almost 8,400 gross unrisked horizontal drilling locations.

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