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Oil Patch Bankruptcy Update

There have been many casualties of the commodity prices slump and 2016 was as big year for oil and gas bankruptcies. According to Haynes and Boone’s latest Oil Patch Bankruptcy Monitor, as many as 114 North American oil and gas producers have filed for bankruptcy since the beginning of 2015. These bankruptcies involve around US$74.2 billion in cumulative secured and unsecured debt. As of December 14, 2016, a total of 70 producers had filed bankruptcy in 2016 alone, representing some US$56.8 billion in cumulative secured and unsecured debt. In oilfield services, Haynes and Boone has estimated that 110 bankruptcies have been filed since the beginning of 2015.

Here is an update on some of the more recent bankruptcy activities.

SAMSON RESOURCES

After nearly 17 months in bankruptcy protection, Tulsa-based Samson Resources Corp. has reached a deal with its lenders and plans to emerge from Chapter 11 bankruptcy reorganization. The settlement plan was approved by voting creditors, including 100 percent of first lien, second lien lenders, holders of over 99 percent of unsecured claims.

Samson executives had filed for bankruptcy protection back on Sept. 16, becoming one of the first Oklahoma companies to file for bankruptcy during the recent oil and natural gas industry downturn. The company claimed $4.2 billion in debt.

EQT CORP.

In the Marcellus basin, EQT Corp. on Thursday said it won a bankruptcy auction to acquire 53,400 core net Marcellus acres for $527 million from Stone Energy Corp., through its subsidiary EQT Production Co. This includes drilling rights on 44,100 net acres in the Utica and current natural gas production of approximately 80 MMcfe (million cubic feet equivalent) per day. Pending final approval by the bankruptcy court at a hearing scheduled for Friday, the transaction is expected to close on or about Feb. 28.

Linn Energy Reorganization Plan Almost Complete

A U.S. judge overseeing the bankruptcy of Linn Energy LLC said he is prepared to confirm its restructuring plan with slight tweaks, backing the oil-and-gas producer’s goal of shedding $5.5 billion in debt and splitting into two companies.

Under Linn’s plan, Berry will become an independent company. Linn will shed nearly $4.3 billion of the roughly $6 billion in debt it had when it filed for bankruptcy. Berry will cut nearly $1.2 billion of its $1.7 billion in prepetition debt.

Linn Energy LLC and Berry Petroleum Company LLC filed voluntary petitions for restructuring under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas in May 2016.

Vanguard Natural Resources Files For Chapter 11

Protection Vanguard Natural Resources LLC (NASDAQ: VNR) (together with its wholly owned subsidiaries, collectively, “Vanguard” or the “Company”) has voluntarily filed petitions for relief under chapter 11 of the US Bankruptcy Code in the US Bankruptcy Court for the Southern District of Texas, Houston Division.

Through the implementation of the transactions set forth in the Restructuring Support Agreement, the company would eliminate approximately $708 million in debt under the company’s reserve-based credit facility and senior unsecured debt.

The company has obtained a committed $50 million debtor-in-possession (DIP) financing facility underwritten by Citibank NA, JPMorgan Securities LLC, and Wells Fargo Bank NA. Subject to court approval, the DIP financing, combined with the company’s cash from operations, is expected to provide sufficient liquidity during the chapter 11 cases to support its continuing business operations and minimize disruption.

Vanguard has filed a series of motions with the court that, when granted, will enable the company to maintain its operations as usual, without interruption throughout the restructuring process.

The company has also filed motions seeking authority to pay expenses associated with production operation and drilling and completion activities, as well as costs associated with gathering, processing, transportation, marketing and those related to joint interest billing for non-operated properties.

Azure Midstream Partners Files For Relief Under Chapter 11

Azure Midstream Partners LP (OTCQB: AZUR) and its affiliates and certain subsidiaries commenced Chapter 11 cases in the United States Bankruptcy Court for the Southern District of Texas. The company anticipates filing a motion to approve procedures for a sale of all or substantially all of its assets, as well as a Chapter 11 plan and accompanying disclosure statement shortly.

The company has reached a consensual agreement with the lenders under that certain Credit Agreement dated as of February 27, 2015 and the lenders are supportive of the company’s process, including the sale process.

The company expects day-to-day operation to continue without interruption throughout the Court-supervised process. The company expects to maintain sufficient liquidity to maintain its business operations until such time as a sale is consummated. The company has filed certain “first day” motions with the court to facilitate operating in the normal course throughout the court-supervised process. The company is seeking court approval this week to continue paying employees, trade creditors, suppliers, and contractors in the ordinary course of business.

These cases do not involve Azure’s parent company, Azure Midstream Energy.

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Compiled and Published by GIB KNIGHT

Gib Knight is a private oil and gas investor and consultant, providing clients advanced analytics and building innovative visual business intelligence solutions to visualize the results, across a broad spectrum of regulatory filings and production data in Oklahoma and Texas. He is the founder of OklahomaMinerals.com, an online resource designed for mineral owners in Oklahoma. ☞Email:g.knight@oklahomaminerals.com

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