Shallow Water E&P Company

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

Role(s)

  • CRO

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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Overview

  • Energy
  • Restructuring and Turnaround

Engagement Team