Fieldwood Energy files for Chapter 11
April 2018 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING
Financier Worldwide Magazine
April 2018 Issue
Adding its name to a long list of US energy companies forced to take action after struggling with a mountain of debt, Fieldwood Energy LLC, together with its subsidiaries and certain affiliates, has filed a voluntary petition for relief under Chapter 11 of the US Bankruptcy Code.
Fieldwood, which is backed by energy investment firm Riverstone Holdings LLC, is having its case heard in the US Bankruptcy Court for the Southern District of Texas as part of a pre-packaged bankruptcy. The Chapter 11 plan of reorganisation encompasses a comprehensive restructuring of Fieldwood’s balance sheet and an acquisition of significant revenue-producing assets.
Drilling down, the proposed restructuring involves reducing current debt by approximately $1.6bn, raising capital of approximately $525m through an equity rights offering and acquiring all deepwater oil and gas assets of Noble Energy, Inc. located in the Gulf of Mexico. The assets complement and enhance Fieldwood’s asset base and operations.
In addition, Fieldwood plans to use the proceeds of the equity rights offering to fund the acquisition, fund the costs and expenses of the Chapter 11 cases, and for general working capital after emergence from Chapter 11. The reorganisation plan also provides that holders of undisputed general unsecured claims will be paid cash in full.
Furthermore, Fieldwood has obtained a $60m debtor-in-possession (DIP) financing facility which is available, if necessary, to ensure that it has adequate funds to operate the business during the restructuring process. The company also filed first day motions seeking approval to continue paying in full, all operating expenses, joint interest billings, royalties, insurance and surety bond costs, employee-related expenses and taxes, among other things.
“These developments are the result of extensive negotiations with our lenders and Riverstone as well as Noble Energy, Inc.,” said Matt McCarroll, Fieldwood’s chief executive. “We appreciate the incredible efforts by all parties involved in structuring this unique plan of reorganisation, which we expect to allow the company to emerge from Chapter 11 with a much stronger balance sheet and greater financial flexibility to grow.”
Focused on acquiring and developing conventional assets, primarily in the Gulf of Mexico region, Fieldwood Energy LLC is the largest operator in the Gulf of Mexico. The company owns an interest in approximately 500 leases covering over two million gross acres, with 1000 wells and 750 employees.
Alongside the Chapter 11 filing, Fieldwood entered into a restructuring support agreement (RSA) with support from stakeholders representing, in principal amount, approximately 75 percent of its first lien term loans, 72 percent of its first lien last-out term loan, 77 percent of its second lien term loan and Riverstone, as the holder of 100 percent of Fieldwood’s sponsor second lien term loan as well as its private equity sponsor.
Mr McCarroll continued: “We fully expect that our operations will continue in the normal course and that we will continue to be able to meet all of our business obligations to third parties as well as the government throughout this process.”
Serving as legal counsel for Fieldwood is Weil, Gotshal & Manges LLP, with Evercore Group LLC as financial adviser and Opportune LLP as restructuring adviser. For Riverstone, Vinson & Elkins LLP is legal counsel and Perella Weinberg Partners is financial adviser.
Mr McCarroll added: “Our goal going into the Chapter 11 process was to fix our leverage and liquidity issues while continuing to honour our commitments to all of our business partners, vendors and employees, as well as all of the government agencies that touch our business. I believe that we have accomplished that goal with this plan.”
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