As we said two days ago when looking at the paltry recoveries on their total debt that bankrupt energy debtors are generating in liquidation and bankruptcy asset sales, “the energy bankruptcy party is only just starting.” And sure enough, overnight we learned that another company is preparing to throw in the towel following a Reuters report that SandRidge Energy – a shale oil and gas producer in the Mid-Continent region of the U.S. – is exploring debt restructuring options, “as the heavily indebted U.S. oil and gas exploration and production company struggles with the fallout from plunging energy prices.”

In reviewing the company’s options, Reuters writes that one choice is a pre-packaged bankruptcy. However, a decision on a way forward is not imminent and that the company has access to enough cash to continue doing business for at least several more months under its current structure. Other avenues SandRidge could pursue would include a debt exchange or filing for bankruptcy protection without any agreement with its creditors.

What this really means is that having struggled to come to a prepackaged bankruptcy agreement for the past few weeks with its various stakeholders (Debtwire reported on Jan. 13 that Sandridge hired Houlihan Lokey to craft a restructuring plan), the company will likely have no choice but to file a “freefall” Chapter 11 and let a bankruptcy judge decide the fate of its $4 billion in debt.

According to Reuters, the vast majority of the company’s debt is in the form of bonds owned by a plethora of mutual funds, hedge funds, and other institutional investors. They do not yet have a single representative who could be reached for comment. They will soon, and shortly thereafter the official creditor committee will become very familiar with recovery matrices that see it getting as much as 15 cents on each dollar it gave to the soon to be bankrupt energy company.

A little bit of history on SandRidge, “which made risky bets in the Mississippi Lime formation in northern Oklahoma and southern Kansas, is particularly vulnerable.”