February 28, 2019 − Privately-held Weatherly Oil & Gas, LLC (f/k/a SND-Vortus LP, “Weatherly” or the “Company”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 19-31087. The Company, a Fort Worth-based oil and natural gas company primarily focused on exploiting natural resources in the Ark-La-Tex region, is represented by Matthew D. Cavenaugh of Jackson Walker L.L.P. Further board-authorized engagements include (i) TenOaks Energy Partners, LLC as sales agent ("Ten Oaks"), (ii) Ankura Consulting Group, LLC as restructuring advisor and (iii) Epiq Corporate Restructuring as claims agent. The Company’s petition notes between 200 and 1,000 creditors; estimated assets between $50mn and $100mn; and estimated liabilities between $100mn and $500mn. Documents filed with the Court list the Company's three largest unsecured creditors as (i) Halliburton Energy Service, Inc ($2.9mn trade debt), (ii) XTO Energy ($938k trade debt) and (iii) Bass Energy Services LLC ($679k trade debt).
Transaction Support Agreement and Purchase and Sale Agreements
In board minutes filed with the Company’s Chapter 11 Petition, Weatherly noted that it has entered into a transaction support agreement, dated as of February 28, 2019, with certain consenting stakeholders, including (a) certain holders of loans under the Company's term loan agreement dated September 18, 2017 (the “Credit Agreement”), (b) the administrative agent under the Credit Agreement, (c) Cargill, Incorporated (“Cargill”), as party to an ISDA Master Agreement dated July 15, 2014, between the Company and Cargill, and (d) certain investment funds and affiliates of Weatherly East Texas, LLC (the Debtor’s parent) that hold equity interests in the Company.
The Company further noted that it had entered into (a) a purchase and sale agreement with BRG Lone Star, Ltd. pursuant to which the Company shall agree to sell certain assets to BRG Lone Star, Ltd. and (b) a letter agreement between the Company and EnSight IV Energy Partners, LLC pursuant to which the Company shall agree to sell certain assets to EnSight IV Energy Partners, LLC.
DIP Financing
The board minutes also noted that the Company has arranged $1.0mn in debtor-in-possession ("DIP") financing to be provided by AG Energy Funding, LLC and AB Energy Opportunity Fund, L.P. as lenders (collectively, the “DIP Lenders”), and Angelo, Gordon Energy Servicer, LLC as administrative agent and collateral agent (the “DIP Agent”).
Ten Oaks Sale Process
In early December 2018, Ten Oaks announced that it had been engaged by Weatherly "in connection with the sale of certain producing properties and leasehold in East Texas." Ten Oaks noted, "Weatherly Oil & Gas: Offset Operator Positions In Shelby Trough Trend. The offer includes a producing East Texas asset with horizontal exposure to the resource-rich Shelby Trough, according to TenOaks.
Highlights:
- Deep inventory of proven horizontal projects targeting the Bossier and Haynesville shales
- 89 horizontal Bossier/Haynesville locations
- 35 horizontal refrack candidates
- Unquantified workover potential exists across asset base
- Leasehold footprint of 24,000 gross (18,000 net) acres
- Recent net daily production of 6.6 million cubic feet equivalent
Bids are due Jan. 23. The virtual data room is scheduled to open Dec. 10."
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