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Bankruptcy Watch: 3/31/16

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As we near the conclusion of the Spring re-determination, the process where banks calibrate their credit levels for producers, the squeeze of 10-30% reductions are being felt as a growing number of producers have delayed their 10k reporting due to pending credit agreement defaults which need to be resolved in order to continue as a going concern.  This week the following companies have announced, or indicated, they are pursuing some form of restructuring:


Seadrill reportedly has hired advisors to help restructure their $11B of debt.   The company operates a fleet of 68 rigs which are contracted under long term commitments.  Seadrill Partners LLC, which has purchased a select number of rigs, and their associated long term agreements, will likely have less access to potential asset drop downs, increasing their cash flow risks as existing contracts roll over.  


Sandridge Energy confirmed that the company has hired advisors to assist in restructuring their $3.6B of debt.  The company operates oil and gas producing assets in the Mid-Continent region, and has developed midstream assets to support their drilling and production programs.  In January 2016, the company terminated a 30 year MVC treating agreement with Occidental by paying $11M in cash, and transferring all of their producing assets related to the treating agreements.  The company had accrued $34.9MM of liability associated with the treating agreements prior to the agreement to terminate.  


Midstream Exposure:  None as disclosed in 2015 10k



Black Ridge Oil and Gas, a Bakken and Three Forks focused producer, confirmed that the company has restructured with the senior lender.


Midstream Exposure:  None as disclosed in 2015 10k



Goodrich Petroleum confirmed that they plan to file for bankruptcy in the coming weeks after reaching a restructuring deal with creditors.  The company operates assets in the Eagle Ford and Tuscaloosa Marine across 43 fields in eight states spending $4.6MM on transportation and processing.  After a sale of the Eagle Ford Trend property, the company does not have minimum volume commitments outstanding


Midstream Exposure:  None as disclosed in 2015 10k


Magnum Hunter, which last week filed a motion to reject their midstream agreements with Eureka Pipeline LCC, was told by the Judge that the company needed to file suit to terminate the agreement, due to the impact on the Chapter 11 filing.  The gathering and processing agreement the company is seeking to reject require a minimum fee of $570,000/mo through 2026, representing $68MM in liability.  The company previously rejected a midstream agreement with Boardwalk's Texas Gas Transmissions, where the company agreed to terminate in lieu of a $15MM claim made against the estate.


Post Rock Energy announced that plan to file Chapter 11 in order to liquidate all of their assets.  The company operates oil and gas assets in the Cherokee Basin, where they own and operate 250 wells with nearly 2200 miles of gas gathering lines.  


Midstream Exposure:  None as disclosed in 2015 10Q





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