Independent Party Renegotiates Contracts to Stabilize Company

Energy/Oil & GasPerformance ImprovementTurnarounds & Restructuring

500M

Annual Sales

60M

Debt

Abarta, Pittsburgh Pennsylvania

Challenge

Oil & Gas producer in both conventual and non-conventual wells and properties including gathering midstream owned leases located in Kentucky, West Virginia, Pennsylvania and Ohio. Subsidiary of a much larger corporation. 700 wells through 37 projects and basin projects as KY pipeline. $500 million in annual sales. $60 million in debt.

  • Senior bank debt and preferred stock totaling $60 million.
  • Gathering Agreement had default, had settlement issues and in litigation with Dominion Gas.
  • Partnership issues with joint operator.
  • Well Abandonment liability set at over $100+ million.
  • Liquidity issues caused by down pricing.
  • Ownership and management frustration with the business.

Solution

  • MorrisAnderson was retained as CRO to evaluate going concern situation and determine path forward.
  • Negotiated an extended amendment with senior lender and extension to restructure the operations.
  • Negotiated a forbearance with Dominion to stay litigation under the Gathering Agreement and allow AOG time to restructure.
  • Negotiated with joint operator for release and dissolution of Actgas partnership giving AOG full rights in the largest conventional operations.
  • Reduce LOE’s and operating cost to breakeven with forward sales.
  • Sold remaining partnerships and Gas holding through a Section 363 Bankruptcy Auction.

Results

  • Negotiated and agreed to a settlement with senior lender to reduce and restructure senior debt and discount preferred stock ownership.
  • Negotiated full release from joint partner which increased operational value, reduced over $10 million in disputed liabilities and allowed for rights to marker projects and retain sales value.
  • Negotiated contingent resolution and deferment of Gathering Agreement liability.
  • Fully paid back parent borrowings and outstanding commitments by senior lender.
  • Sold off idle assets, negotiated resolution with lease holders on material well abandonment charges.
  • Contract with buyer of largest portion of conventional operated and non-operated assets.
  • Completed all debt restructuring out of court, but filed Chapter 11 to resolve joint venture (JV) litigation and force a sale of Company’s JV interests
  • Bankruptcy Plan confirmation paid 100% of all unsecured creditors and 100% of restructured secured claims.
  • Bankruptcy Plan made additional preferred and common stock distributions post Bankruptcy confirmation.

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