Shallow Water Exploration & Production

Shallow Water Exploration & Production

Roles
Chief Restructuring Officer
  • Company sold under Section 363 
  • Assets free and clear of claims and encumbrances

The company was an exploration and production company with resources in the shallow water of Louisiana and was caught in the downdraft of fall oil prices. Turmoil in the industry limited its feasibility of obtaining new financing as mechanic and other liens were levied on the company. CR3 professionals were engaged as CRO during the pendency of bankruptcy. Company was successfully marketed and sold under section 363 to sell its asset free and clear of claims and encumbrances. The remaining estate claims were pursued subsequent to the plan for recovery to the unsecured creditors.

The Situation

  • Exploration and production company with most resources in the shallow water of Louisiana
  • Company caught in the downdraft of falling oil prices and quickly experienced a liquidity crisis
  • Turmoil in oil and gas industry limited feasibility of obtaining new financing, leading the company to file for bankruptcy in Texas
  • Mechanic and other liens were levied on the company

The Work

  • Engaged as CRO during the pendency of bankruptcy case
  • DIP financing was arranged to accommodate a quick sale to maximize value
  • The reserve report was severely underestimated based on management’s estimate of P&A costs
  • Company was reduced to where a strategic player could absorb the team with few terminations to reduce the burn rate of cash
  • Data rooms and management interviews were arranged to facilitate due diligence
  • Due to a very large plug and abandonment liability, the sale price was substantially lower than the estate hoped to achieve

The Results

  • Company was successfully marketed and sold at auction under section 363 of the U.S. Bankruptcy Code
  • Company used the bankruptcy process to sell its assets free and clear of claims and encumbrances, despite many claims at the wellhead and remediation claims
  • Remaining estate claims were pursued subsequent to the plan for recovery to the unsecured creditors

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