Oil Woes Hit Texas Hotels

Oil and gas drillers and the companies that serve them aren’t the only ones facing distress in the wake of plummeting oil prices. Hotels that house their out-of-town workers are, too.

A group of companies that together own eight Texas hotels on Wednesday sought chapter 11 bankruptcy protection after failing to reach a deal to refinance their debt. In filing for chapter 11, the companies join a long list of oil and gas companies that have sought court protection this year. To name a few: producers such as Quicksilver Resources, BPZ Resources and Dune Energy, and servicers like Boomerang Tube and Cal Dive International.

The companies’ hotels are located in the Texas cities of Andrews, Midland, Cuero, Pearsall, Pecos and Port Arthur, with another hotel in Hobbs, N.M.—all areas the companies say have “high concentrations” of oil and gas activity. As a result, much of the hotels’ business is “closely tied” to the industry, which employs many out-of-town workers who need lodging.

In court papers, the companies say they’re hoping to continue to operate the hotels, which they say are cash-flow positive. To that end, they’ve asked a Texas bankruptcy court for the right to tap their lender’s cash collateral. The first hearing in the case is set for Friday.

Write to Jacqueline Palank at [email protected]. Follow her on Twitter at @PalankJ