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Bankruptcy Watch: 05/13/16

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As banks complete their 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:


Penn Virginia Corp, an E&P company with assets primarily based in the Eagle Ford, filed for Chapter 11 relief this past Thursday, which includes an agreement to reduce their $1.6B in debt.  The company has entered into MVC agreements which total $63MM over the next 5+ years and expects to maintain production after the restructuring.




Midstream Agreements:  $17.3MM annually, $12.3MM due to Republic Midstream after the company sold the gathering rights in 2014 for $147MM.  Republic is owned by ArcLight, which has invested $400MM to develop the new gathering and pipeline network.  ArcLight has provided American Midstream with a 50% option to purchase the asset for $200MM, an unlikely scenario for the time being.


LINN Energy filed for Chapter 11 relief to address their $8.3B of debt, marking the first MLP Bankruptcy since the Thanksgiving crude crash.  The E&P producer, which in late 2013 acquired Berry Petroleum in an equity deal, announced a plan to swap debt for equity, 90% of which will be owned by debt holders.  The filing indicated they will seek approval to continue to allow Linn Energy unitholders to convert their ownership into LinnCo shares, to avoid potential CODI tax obligations related to to the debt restructuring.  The current exchange is set to expire on May 23


Midstream Agreements:  No Midstream agreements disclosed in 10K, Archrock Partners LP, DCP Midstream have outstanding trade debts





Chaparral Exploration,  a Mid-continent gas producer with an EOR business, filed for Chapter 11 relief to reduce their debt by $1.2B


Midstream Agreements:  No Midstream agreements disclosed in most recent 10K, no Trade Debt with midstream providers





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