Operational and financial restructuring in the energy & natural resources sector




FW moderates a discussion on operational and financial restructuring in the energy & natural resources sector between Bruce J. Ruzinsky, a partner at Jackson Walker LLP, Gregory M. Gordon, a partner at Jones Day, Trey A. Monsour, a partner at K&L Gates LLP, George R. Ward, co-head and managing director at PJSC Energy Advisory Group, and Christopher M. Dressel, an associate at Skadden, Arps, Slate, Meagher & Flom LLP.

FW: Reflecting on the last 12-18 months, how would you describe the general state of the energy & natural resources sectors? What pressures are exerting themselves on these industries, and how are companies faring?

Ruzinsky: Over the last 12 to 18 months the energy industry has largely been in a ‘down cycle’. Crude oil prices have declined significantly. Although natural gas prices rest at about the same level they were at 18 months ago, they have increased over 50 percent since the beginning of the year. Exploration and production budgets have been cut significantly. Industry participants have largely cut costs to the point where there is not much room left for material further cost cutting. Industry participants who expanded by taking on significantly more debt during the ‘good times’, have found it increasingly difficult to service that debt. This is particularly true for the energy services industry.

Gordon: Low oil & natural gas prices and diminished demand for oil field services have reduced revenues and profits. This has been exacerbated by the loss of favourable hedge positions, which began to roll off at the end of 2015 and the beginning of 2016. In addition, redeterminations of oil reserves by secured lenders have reduced liquidity and, in some cases, triggered loan defaults. Although energy companies have cut costs in an effort to combat these pressures, many have had no choice but to address their balance sheet issues through more drastic measures.

Monsour: Organised chaos is the term I would use to describe the current state of the energy sector. In early 2015, as we began to see the significant declines in commodity prices, industry experts began to speculate about the root cause or causes of the recession, how long it was going to last and how industry players could take steps to survive it. Predictions that the fallout would be deeper and more widespread than in the 1980s stirred the markets. Some experts predicted industry casualties of far greater scope and magnitude than what we have seen so far. Regulators of asset-based lending institutions in somewhat of a panic took a strict and unbending approach to enforcement and compliance which has, in my view, been one of the reasons we are seeing mergers among banks that do not appear to have a synergy between them.

Ward: The energy sector remains in a prolonged downturn driven largely by oversupply in the market, exacerbated by languid global demand. Recently, the benchmark price for domestic oil dipped below $40 per barrel for the first time since April of this year. Prospects had been improving in 2016 as prices rose past $50 per barrel and the industry began to reinvest in production, but recent supply indicators show historically high inventories amid strong foreign production and global demand concerns. As a result, we will continue to see balance sheet stress in the upstream space marked by further restructuring and creative refinancing structures. The near-term outlook for a recovery in the commodity price looks difficult; however, the marginal cost of production will ultimately drive prices back above $60 per barrel. As that happens, we will see a broad recovery in the sector as renewed drilling programmes generate increased cash flow and ultimately support recovering service and midstream companies. Natural gas has fared far better than oil over the same period, recovering recently to about $2.85per Mcf from the lows below $2 per Mcf earlier this year. While some of the lower cost producing regions are profitable at these levels, the marginal cost of production is well over $3 per Mcf. Assuming demand from electricity generation, LNG exports and feedstocks continue to grow, continued recovery of natural gas prices is likely to support existing debt levels at predominantly gas producing companies.

Dressel: The precipitous decline in oil, natural gas, metals and other commodity markets, which began in autumn 2014, has placed considerable financial stress on companies throughout the energy and natural resources sectors. Since January 2015, approximately 90 North American E&P companies and 80 midstream and services companies have commenced formal insolvency proceedings. The metals and mining sector has also experienced an upsurge in default rates and bankruptcy filings. Although commodity markets have risen somewhat since early 2016, few observers expect a rapid upsurge in prices. Further, many E&P companies have responded to the market downturn by aggressively curtailing operating costs and capital expenditures, placing increased pressure on midstream and services firms.

Many E&P companies have responded to the market downturn by aggressively curtailing operating costs and capital expenditures, placing increased pressure on midstream and services firms.
— Christopher M. Dressel

FW: Could you provide a brief overview of the key operational and restructuring issues currently affecting the energy & natural resources sectors?

Ward: Financial leverage is the key issue affecting the sector today. Leading up to 2014, operations and balance sheets were built assuming a much higher commodity price environment – $90 per barrel and $3 per Mcf. Hence, companies found themselves in a difficult position as top line revenue and reserve values dropped dramatically with the downturn in commodity prices at the end of 2014. While drilling costs have come down significantly in this cycle, many companies are still struggling to be profitable in the current price environment.

Dressel: Many energy and resources firms have capital and cost structures incompatible with the low price environment we have experienced over the past 18 months. The expansion of domestic energy production over the last 10 to 15 years has been driven, to a considerable degree, by the exploitation of unconventional plays with relatively high break-even costs. E&P companies targeting these plays, and the services and midstream companies on which they rely, are among the firms most affected by the downturn in commodity prices. E&P companies have responded to these challenges by implementing significant cost-saving initiatives, including dramatically curtailing drilling and other capital expenditures; but many have recognised that these measures do not sufficiently address long-term challenges and therefore have undertaken more comprehensive efforts to reform their balance sheets, whether through formal insolvency proceedings or out-of-court workouts.

Gordon: On the operations side, companies can no longer conduct ‘business as usual’. Instead, they have been forced to focus on preservation of liquidity. This has raised questions regarding the need for reductions in capital expenditures, possible cutbacks in operations, and possible down-sizing of office space. Finally, possible divestitures of non-core assets, even in the current depressed market, must also be examined. With respect to restructurings, key questions include the extent to which a company must shed debt and otherwise modify its capital structure, the magnitude of future cash flows available to pay debt and provide necessary working capital, and the identification of stakeholders that are ‘in-the-money’.

Monsour: Every company, whether upstream, midstream or oil field supply and service, has had to respond by cutting back on its capital budget, overhead and staff. Wells have been shut in. There has been a sharp decline in upstream spending. Funding for capital projects has dried up, although we are beginning to see activity on some low cost, low risk projects. There has been a consolidation of transaction activity. The industry has quickly responded to the downturn and may have overreacted. As demand catches up to or even exceeds supply, we will see an increase in fuel prices for the consumer followed by more activity in the sector.

Ruzinsky: Key operational issues currently impacting the energy industry include managing and limiting plugging and abandonment (P&A) costs, infrastructure access and availability, liquidity during expensive restructuring efforts, and maintaining mutually beneficial relations with key vendors and suppliers. There are a number of key restructuring issues currently impacting the energy industry as well, including de-leveraging the balance sheet by selling assets, reducing operations or exchanging debt for equity. Also, there is the question of who will ultimately control claims or causes of action owned by the Chapter 11 estate – the debtor, a creditors committee or an equity shareholders committee? Further, if significant mid-stream assets are involved, there may be an issue regarding whether transportation and processing agreements constitute a covenant running with the land, and whether they can be rejected in whole or in part in Chapter 11. Litigation with mineral interest owners is another issue.

Recently, several energy companies have opted to employ a restructuring support agreement (RSA) which is effectively a pre-negotiated settlement with creditors controlling ‘fulcrum securities’ or a prepackaged bankruptcy.
— George R. Ward

FW: Have any recent regulatory developments created fresh challenges for these sectors?

Monsour: In 2016, under the direction of President Obama, the EPA released its first ever methane emissions control regulations to help curtail the greenhouse effects of such emissions. The full impact of the regulation on the energy sector will not be realised for a few more years. From the perspective of the fossil fuel industry, methane emission controls appear to be another effort by the administration to prop up the renewable energy sector in an election year by making reporting more complex. With a new administration soon to settle in Washington DC, we may see fewer incentives across the board for renewable energy companies who cannot show a strong economic viability going forward.

Ruzinsky: P&A costs for offshore wells continue to be a regulatory and restructuring concern. Responsibility for offshore P&A liability rests with the Bureau of Ocean Energy Management (BOEM). Determining the applicable time period – pre-bankruptcy or post-bankruptcy – of P&A liability is important because post-bankruptcy administrative claims normally need to be paid in full on the effective date of a Chapter 11 plan, as opposed to pre-bankruptcy claims that can be paid over a much longer period of time and at lower levels.

Gordon: Current regulations, especially those restricting methane and greenhouse gas emissions from gas wells, continue to generate new expenses and uncertainty for companies in the energy sector. Moreover, currently proposed regulations promise additional challenges for the natural gas pipeline industry. The Department of Transportation has proposed a major expansion of the safety requirements applicable to gas pipelines, including a requirement that older pipelines comply with more modern safety standards. These proposed rules will, if adopted, require significant expenditures on operations and maintenance activities and, for some pipelines, major capital outlays. The coal industry in particular has also been adversely affected by regulations. These include the EPA’s Cross State Air Pollution Rule, its Mercury And Air Toxics Standards, and proposed new rules to reduce carbon dioxide emissions from new and existing power plants.

Dressel: Regulatory developments are not the primary drivers of distress in the energy and resources sector but nonetheless pose challenges to companies attempting to restructure in this environment. Offshore producers, which face comparatively greater regulatory scrutiny than their onshore counterparts, have been particularly hard hit by the market downturn. Onshore E&P companies face their own regulatory pressures, however. For example, restrictions on ‘trucking’ and ‘flaring’ of produced crude oil & natural gas, respectively, may limit producers’ ability to implement alternatives to above-market gathering arrangements. It is also worth noting that large banks are subject to increased scrutiny from bank regulators with respect to their underwriting standards for reserve-based loans and have therefore become less flexible in their approach to distressed E&P borrowers.

FW: Based on your experience, what are some of the operational and financial restructuring strategies that energy & natural resources companies are utilising in today’s market?

Gordon: On the operations side, companies have focused primarily on cost reduction. Among other things, they have reduced capital expenditures by cancelling or deferring capital projects, lowered operating costs by engaging in more aggressive negotiations with suppliers and service providers, and reduced administrative costs through headcount reductions and downsizing of office and other space. Additionally, companies have streamlined their operations by selling non-core assets and focusing on their core businesses. With respect to out-of-court financial restructurings, companies have refinanced their indebtedness, purchased their own debt and consummated exchange offers whereby debt was converted into equity, other debt or a combination of equity and debt. The majority of in-court restructurings have been prepackaged or pre-negotiated cases where companies have, prior to the commencement of the bankruptcy case, entered into restructuring support agreements with a substantial percentage of their affected lenders that set forth the terms of an agreed restructuring.

Monsour: The most important, yet most difficult, strategy is to build or preserve your cash position – a particularly difficult task in a low price environment. We have seen drilling suspensions to curtail costs unless those underlying properties are needed to preserve the underlying leasehold or unit. Large draws against lines of credit have been made and the cash has been held in non-collateralised accounts. Unless a capital project is essential or necessary to the company’s long term viability, it has been indefinitely suspended. Layoffs have hit some of the most qualified developers and engineers.

Dressel: Responses and strategies have been varied and evolving. On the operational side, many companies responded to falling prices with aggressive cost-cutting initiatives, including, in the E&P sector, substantial reductions in drilling and completion activities. This trend began to reverse itself in Spring 2016, as prices began to rise; but this, in turn, has led to renewed ‘oversupply’ concerns. Companies have also pursued a variety of strategies to address over-levered balance sheets. In 2015, a number of companies pursued more incremental solutions, including uptier exchanges and other consensual, out-of-court workouts. For a variety of reasons, these strategies were insufficient, in many cases, to resolve the company’s capital structure challenges, necessitating more extensive subsequent restructuring transactions – in many cases through a Chapter 11 process.

Ruzinsky: Some operational and financial restructuring strategies for energy companies in today’s market include drawing down on lines of credit pre-bankruptcy before the next borrowing base redetermination, negotiating in the pre-bankruptcy phase and then seeking to assume, post-bankruptcy, a restructuring support agreement. A further strategy would be negotiating, and possibly obtaining approval for, a restructuring plan from all the major constituencies pre-bankruptcy, and then filing a full or partial pre-packaged Chapter 11 to complete the case faster. Renegotiating contracts that might otherwise be rejected in a Chapter 11 case may be a further strategy, as is building cash reserves from delayed payment of accounts payable.

Ward: The extended downturn in the energy sector has caused many high-flying upstream companies to restructure their balance sheets or in some cases seek protection from creditors in a Chapter 11 bankruptcy filing. While Chapter 11 affords debtors some important protections and broadly empowers the company to reorganise, it can be an excruciatingly long, draining and expensive process. Recently, several energy companies have opted to employ a restructuring support agreement (RSA) which is effectively a pre-negotiated settlement with creditors controlling ‘fulcrum securities’ or a prepackaged bankruptcy. The key benefit of the RSA is that it greatly reduces the time a company spends in Chapter 11, and facilitates a quicker return to financial health. Expediting the process has many benefits to the debtor, including cost savings, retaining key personnel and refocusing management on core business. Depending on the facts and circumstances, the RSA may be the most efficient approach for debtors.

With energy related businesses, it is important to engage CROs, legal and financial advisers with real industry experience.
— Trey A. Monsour

FW: Have any recent, notable restructuring cases in these sectors caught your eye? What lessons can we draw from their outcome?

Dressel: Two cases recently confirmed in the Southern District of New York, Sabine Oil & Gas and Atlas Resources, are illustrative of the wide spectrum of oil & gas bankruptcies we have seen over the past 12 to 18 months. The Sabine plan was confirmed over the strenuous objections of the unsecured creditors’ committee after months of intensive litigation. At the other extreme, Atlas achieved confirmation of its prepackaged Chapter 11 plan barely a month after filing. Notably, many debtors have filed with at least some elements of a Chapter 11 plan already negotiated pursuant to a prepetition RSA, on the premise that doing so would facilitate a speedy and consensual bankruptcy process. These efforts have not been uniformly successful, however. In some cases, like Samson Resources, falling commodity prices rendered continued pursuit of the transaction outlined in the prepetition RSA unworkable. More generally, one observes that cases filed in mid-2015, such as Sabine, Samson, ERG and Quicksilver have been particularly challenging, as further deterioration in market conditions during late 2015 and early 2016 made it difficult to generate consensus among creditors.

Ruzinsky: In Sabine, the unsecured creditors committee attempted to obtain control of claims and causes of action they asserted were valuable and important to the debtor’s estate and recovery for creditors. Ultimately, the Bankruptcy Court found that most of the claims had no merit whatsoever, and it was not productive to pursue the few remaining claims in view of the ongoing reorganisation efforts. Ultimately, a Chapter 11 plan was confirmed that included releases of any and all such claims and paved the way for a reorganised company with a significantly improved balance sheet via an exchange of debt for equity.

Gordon: The Swift Energy Chapter 11 case is notable because it was one of the first large E&P companies to file for Chapter 11 and the first to emerge from bankruptcy. Swift filed with a RSA in place with its noteholders, and the agreed plan included a significant recovery for the equity holders – 4 percent of the common equity plus three and four year warrants for an additional 30 percent of the equity. The Chapter 11 case moved quickly as Swift filed for Chapter 11 on New Year’s Eve 2015 and emerged in mid-April 2016. Many other companies have followed the Swift blueprint and been able to expedite their stay in Chapter 11. Examples of other recent, expedited in-court restructurings include Halcon Resources, Atlas Energy, Southcross Energy and Seventy Seven Energy.

Monsour: In Spring 2016, two cases were reported – one out of a bankruptcy court in New York and the other out of a bankruptcy court in Delaware, which the industry followed closely. The courts in these cases were confronted with requests by the debtor to reject the gathering agreements with midstream counterparties. These agreements contained dedications that purported to encumber or ‘run with the land’. In these two cases, the bankruptcy courts looked to state law to determine whether the dedications complied with state law. If so, the gathering agreements would be impervious to rejection as is the case with other types of ‘executory’ contracts. In both cases, the dedications were deemed inadequate and the gathering agreements were rejected. The takeaway is more of a drafting issue when preparing gathering agreements. Prior to the decisions, it was sufficient that gathering agreements contain language that the dedication is a covenant running with the land.

Building consensus is crucial as many of the recent successful bankruptcies have been predicated upon pre-petition agreements with the company’s fulcrum lenders.
— Gregory M. Gordon

FW: To what extent can appointing a chief restructuring officer (CRO) improve a company’s chances of achieving a successful operational and financial restructuring?

Ward: Top quality financial and legal advice is often the key to complex financial restructurings. Interestingly, in the energy sector, it is often beneficial to various constituents to retain not only generalist restructuring professionals, but also advisers with specific energy experience. A team, retained early in the process that comprises both restructuring and energy expertise, can ensure the debtor tailors a solution that maximises the value of the estate and preserves that value by expediting the process. Companies often wait too long to retain advisers in a form of corporate denial – no management team likes to admit that their company needs restructuring. In some situations, a chief restructuring officer employed by the company can help manage both the internal operating and external restructuring processes. Overseeing the internal financial operations can be as important as managing financial and legal advisers. A CRO and outside financial advisers can also form a buffer between management and creditors throughout the process.

Monsour: Years ago, the appointment of a CRO was used to avoid litigation over the appointment of a trustee. Today, CROs are highly experienced consultants who can bring a wealth of experience, independence and credibility to a distressed situation. CROs can be an essential step toward restoring credibility with customers, lenders, bondholders and even employees. With in-court restructurings, bankruptcy judges appreciate CROs for their credibility and their ability to organise and spearhead discussions among disparate creditor factions. With energy related businesses, it is important to engage CROs, legal and financial advisers with real industry experience. In some industries, CROs who have significant turnaround experience can ‘wing’ the industry knowledge requirement and get by just fine. The energy sector is unique, however, and a CRO cannot get by on generalised experience working with troubled companies. Rather, a true energy specialist is required.

Gordon: The appointment of an experienced CRO will often provide lenders whose support the company needs with a higher level of confidence that the company’s plans and proposals are well-considered and its projections are well-supported. Additionally, companies that have engaged in headcount reductions may require the assistance of a CRO because they lack sufficient resources to perform the tasks required for a successful restructuring, including assisting the company with the formulation of proposals, projections, further downsizing initiatives and other actions, while at the same time responding to innumerable questions and inquiries from creditors participating in the restructuring process. Finally, a CRO can provide a company with a fresh perspective on the restructuring, enabling the company to examine its restructuring options in a more thoughtful and objective manner.

Dressel: In many cases, a company will appoint a professional of its restructuring advisory firm as a CRO. In other cases, a company may designate an existing senior officer – its CFO, for example – as CRO. In either case, designating one officer to spearhead the company’s restructuring efforts can help establish credibility and accountability, improve coordination, and generally facilitate the restructuring. At the same time, companies should be cautious in announcing the appointment of a CRO, as doing so is typically interpreted as a signal that a restructuring process – often an in-court process – is imminent.

Ruzinsky: Appointing a CRO may improve a distressed company’s chances of achieving a successful restructuring. An important consideration in selecting a CRO is not just the CRO’s restructuring experience, but also his or her industry experience. A qualified CRO who has the support of most or all of the company’s creditor constituency, as well as the company’s management and board, is well positioned to provide valuable assistance. Before or after any bankruptcy filing, creditors and stakeholders may have a higher degree of confidence that a good CRO will properly manage cash, reduce costs, properly handle revenues, and develop reorganisation or other asset value maximisation alternatives that are not just management friendly or shareholder friendly. A CRO can also add value after a bankruptcy filing, especially in situations where creditors, stakeholders or the court have less confidence in the debtor’s management. A CRO may also be used by a debtor’s management in a Chapter 11 case to blunt efforts for appointment of a Chapter 11 trustee, where there would otherwise be good cause for appointment of such a trustee. The appointment of a CRO is a less drastic remedy.

FW: What do you believe are the essential elements of a viable restructuring effort to create long-term value? What advice can you offer to companies that are considering this process?

Ruzinsky: Some essential elements of a viable restructuring effort to create long-term value include the presence of experienced lawyers and financial advisers. Equally, companies must also benefit from strong management and highly motivated and talented employees. Organisations must also be able to call upon sufficient initial funding or liquidity. It is important the company has a good core business and a balance sheet that can be de-leveraged where possible. Companies must also demonstrate discipline wherever possible. Companies that are considering this process should do several things – they should take the advice of their professionals, communicate regularly with creditors to avoid leaving them in the dark, prepare for hard work and long hours, and be straightforward and responsive to all parties involved, especially the court.

Dressel: Careful planning, stakeholder engagement and consensus-building are important prerequisites to a successful process, particularly an in-court process. Companies should consider the competing objectives of stakeholders at various levels throughout the capital structure. For instance, senior lenders may place more emphasis on certainty of execution than on the precise terms of the ultimate transaction, whereas the fulcrum security holder may accept increased uncertainty, cost and complexity in order to generate incremental value. Proactive communication with employees, vendors and other ordinary-course stakeholders is also important, even if the company’s restructuring objectives do not encompass such stakeholders.

Monsour: Bankruptcy is an expensive process, often with a large degree of uncertainty in its outcome, even when there is an agreement among the major constituents going into it. One way to maintain control of the process is to reach out-of-court agreements with as many of the major creditor groups as possible with the exit strategy to be implemented through a bankruptcy case. In the rash of oil & gas bankruptcy filings in 2016, most have adopted this prepackaged strategy and have filed their bankruptcy cases following the execution of a definitive plan support agreement. When selecting counsel, it is an important consideration whether to employ counsel that knows your company. Like CROs, I believe it is important to hire restructuring counsel that has qualifications both in restructuring and bankruptcy and in the energy sector.

Ward: The recent boom in the oil & gas industry, associated with the application of new technologies for horizontal drilling and hydraulic fracturing, unlocked tremendous resource potential in many of the new resource plays, both domestically and around the world. This boom caused excessive spending by companies that were competing for acreage positions. Excessive spending coupled with the dramatic pricing downturn since mid-2014 has caused tremendous stress within the industry, resulting in 85 bankruptcy filings in the US alone since early 2015. To be successful in their restructuring plans, these companies and others considering such steps must dramatically alter their cost structures through overhead and operating cuts, as well as focus current and future capital expenditures on areas with proven rates of return. This can mean selective asset divestitures in areas that are either uneconomical or that offer low favourable rates of return. To optimise future revenue these companies will also need to implement creative hedging strategies. Various claimholders must also be willing to make concessions and work together to come up with a structure that will be most beneficial to all parties involved. Finally, management must implement an incentive system that will adequately measure, monitor and reward the company’s performance against its revised goals and strategies.

Gordon: A viable restructuring effort requires careful planning. As an initial matter, the appropriate legal and financial professionals should be promptly retained, and the company should consult with its key constituents with the aim of achieving a consensus on the terms of a restructuring. Building consensus is crucial as many of the recent successful bankruptcies have been predicated upon pre-petition agreements with the company’s fulcrum lenders. Another key to a successful restructuring is ensuring that the company has adequate financing to operate its business and pay the costs of the restructuring process. Further, a company needs to be realistic in terms of the amount of debt it can reasonably handle. Projections should be conservative so that the company ultimately has a balance sheet that provides sufficient flexibility to weather future swings in commodity prices and other adverse macroeconomic factors.

We expect to see a fairly steady flow of restructuring efforts from energy industry companies over the next six to nine to 12 months. We do not expect that to continue for years.
— Bruce J. Ruzinsky

FW: In your opinion, what is the outlook for the energy & natural resources sectors going forward? Do you expect to see an increase in restructuring efforts over the coming months and years?

Gordon: Low commodity prices continue to present serious challenges. Although energy companies have experienced some respite due to the recent oil price improvement to a range of $40 to $50 a barrel, it is not clear when or if a sustainable rise will occur. Coal companies likewise continue to suffer from low coal prices, competitive pressures from low natural gas prices, weak demand for coal and regulatory obstacles. As a result, it seems reasonable to assume that there will be significant restructuring activity in the energy and natural resource sectors in the coming months.

Ward: Energy and natural resources sector fortunes are driven by commodity prices and the general consensus is that the sector hit bottom in February 2016 when oil prices fell below $30 per barrel and natural gas prices fell below $2 per Mcf. The rate of recovery in energy prices is uncertain and supply continues to exceed demand with inventories at record levels. In these conditions, any company with excessive debt, negative cash flow after capex, or operations in high cost areas remains a possible restructuring candidate. The timing and magnitude of a price recovery necessary to keep most energy companies afloat is thought to be $60 per barrel of oil and $3-plus per Mcf gas – prices the US market has yet to attain in 2016.

Dressel: Although market conditions have improved materially since early 2016, many companies continue to face considerable pressure on their balance sheets and operations. In addition, restructuring initiatives in the upstream space have only increased the pressure on companies further downstream. While Chapter 11 filings may not continue at the same levels we experienced in earlier this year, we expect that this sector will continue to experience an outsized share of restructuring activity.

Ruzinsky: In our view, the outlook for the energy industry in the near term is difficult, especially for energy service providers. However, in the medium to long term, we believe the industry prospect is solid and strong. We expect to see a fairly steady flow of restructuring efforts from energy industry companies over the next six to nine to 12 months. We do not expect that to continue for years.

Monsour: My view of the fallout we have seen so far is not really that different from any other industry in which a substantial oversupply has occurred. Over the last year, supply has been at an all-time high due to a number of factors, domestic and international, resulting in a significant and sustained price depression. As supply and demand move closer together, there will be a gradual increase in the price of oil. Because much of the success in the energy sector has historically been driven by technology, what may not be profitable today at a certain price point may change dramatically if a new device or process is developed. I think we will see more filings and out-of-court restructurings, but I do not anticipate an epidemic.


Bruce Ruzinsky is a restructuring and trial lawyer with extensive experience representing financial institutions, corporations and other business entities in workout/restructure efforts, Chapter bankruptcy proceedings and litigation. He approaches his cases strategically, proactively and cost-effectively. For over 30 years, he has represented creditors, creditors’ committees, trustees, debtors, landlords and asset purchasers in various industries and business environments, including energy, real estate, healthcare, shipping, manufacturing, transportation, retail, entertainment, wholesale produce, healthcare and personal services. He can be contacted on +1 (713) 752 4204 or by email: bruzinsky@jw.com.

Greg Gordon has more than 30 years of experience in business restructurings, distress acquisitions and dispositions, and commercial litigation. He has represented debtors, lenders, creditors’ committees, and buyers and sellers in out-of-court and in-court restructurings and has substantial experience with cross-border insolvencies. His restructuring, distress M&A and litigation experience involves a wide variety of industries, including energy, oil & gas, retail, chemicals, homebuilding, metals and mining, technology, timeshare, textiles, automotive and healthcare. He can be contacted on +1 (214) 969 3759 or by email: gmgordon@jonesday.com.

Trey Monsour is a partner in the restructuring and bankruptcy practice group of K&L Gates. He is involved in the firm’s restructuring practice throughout the southwest region of the US. Mr Monsour has offices both in Houston and Dallas and has extensive experience in workouts, restructuring troubled businesses and commercial bankruptcy cases both for debtors, creditor constituencies including committees, indenture trustees and agents, senior lenders and buyers. Mr Monsour also has considerable bankruptcy litigation experience. He can be contacted on +1 (713) 815 7320 or by email: trey.monsour@klgates.com.

George R. Ward joined PJSC in 2016 as a partner and managing director and serves as co-head of the firm’s energy advisory group. Mr Ward has over 20 years of energy investment banking experience, advising clients on a variety of assignments including domestic and cross-border/international sell-side, buy-side, divestiture and mergers transactions, restructuring assignments as well as capital markets. He holds significant expertise in the midstream, utilities, upstream, renewables and clean technology sectors. He can be contacted on +1 (346) 571 1592 or by email: gward@pjsc.com.

Christopher M. Dressel represents creditors and debtors in an array of distressed transactions and situations involving debt restructurings and recapitalisations, section 363 and other distressed M&A transactions, company-side representations, and creditors’ committee representations. He can be contacted on +1 (312) 407 0968 or by email: christopher.dressel@skadden.com.

© Financier Worldwide



Bruce J. Ruzinsky

Jackson Walker LLP


Gregory M. Gordon

Jones Day


Trey A. Monsour

K&L Gates LLP


George R. Ward

PJSC Energy Advisory Group


Christopher M. Dressel

Skadden, Arps, Slate, Meagher & Flom LLP

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