Finance - Restructuring
SandRidge, working with law firm Kirkland & Ellis and investment bank Houlihan Lokey on restructuring, drew down its credit line and trimmed costs with asset sales and job cuts, Reuters said.
Some credit rating agencies view the exchange of new 1.5 lien secured notes for existing senior unsecured and second-lien secured notes as a distressed exchange and a limited default, Reuters said.
"Today's announcement represents another significant step in our ongoing efforts to address the challenges before us and position the company for long-term success," said Mark DePuy, CEO.
In separate filing, SandRidge said it would file annual report for 2015 late, and it expects accounting firm to doubt its ability to continue as a "going concern," Reuters reported.
With about $10 billion debt, if Linn files for bankruptcy it would be largest to date, Reuters said. Value of bonds issued in November fell to about 15 cents on dollar.
Lawyers told Reuters some gathering agreements did not appear well protected against bankruptcy, in part because the contracts were written when one company owned both energy production and midstream operations.
Restructuring became difficult after low commodity prices and limited access to capital, negative operating results, no suitable offer for assets and an accelerated credit facility payment, among other issues.
Certain first-day motions were filed with the court to ease normal course operations during the bankruptcy process. U.K.-based Paragon expects to maintain sufficient liquidity to maintain its business operations.
Kent P. Watts, chairman, added that Hydrocarb wants to enhance its current assets and leverage its P5 operator status in Texas.
Vallourec, which gets two-thirds of sales' revenue from the oil and gas sector, has been trying to cut production capacity to cope with the downturn affecting its customers as energy prices fall.
As the chief restructuring officer, Jim Latimer, managing director of Blackhill, will manage RAAM’s operations. Latimer said RAAM should emerge from bankruptcy with more capital available for drilling.
Since August, creditors have filed petitions for involuntary bankruptcy against three energy producers with nearly $2 billion in combined debt, Reuters said. The rare involuntary bankruptcy petitions target smaller companies.