January 1, 2021 – The Debtors filed a Plan of Reorganization and related Disclosure Statement [Docket Nos. 722 and 723, respectively]. They further filed a motion requesting Court approval of (i) the adequacy of the Disclosure Statement (ii) proposed Plan solicitation and voting procedures and (iii) a proposed timeline that would culminate in a March 17th Plan confirmation hearing [Docket No. 724].
On August 3, 2020, Fieldwood Energy LLC and 13 affiliated debtors (“Fieldwood” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of Texas, lead case number 20-33948. At filing, the Debtors’ lead petition noted estimated assets between $1.0bn and $10.0bn; and estimated liabilities between $1.0bn and $10.0bn (total funded debt of $1.8bn).
The Debtors' Plan is based on a restructuring support agreement (the "RSA") between the Debtors, their first-lien term loan lenders, second-lien term loan lenders and Apache Corporation, the predecessor in interest for the vast majority of the Debtors' shelf assets. The plan calls for a Credit Bid Sale of certain of the Debtors' deepwater assets and shelf assets, a divisive merger related to Legacy Apache assets and the abandonment of certain other properties.
Plan Overview
The Disclosure Statement [Docket No. 723] notes, “The restructuring contemplated by the Plan is a significant achievement for the Debtors in the midst of an unprecedented and challenging operating environment. The Debtors strongly believe that the Plan is in the best interests of their creditors, equity holders and estates and represents the best available alternative at this time. Indeed, the Plan is supported by several of the Debtors’ key stakeholders, including the DIP Lenders, the FLTL Lenders holding approximately 76.75% of the FLTL Claims, the SLTL Lenders holding approximately 28.91% of the SLTL Claims and Apache Corporation (‘Apache’), the predecessor in interest for the vast majority of the Debtors’ Shelf Assets. Moreover, the Plan is the culmination of extensive arm’s length negotiations that have occurred over the last several months with the Debtors’ Consenting Creditors (as defined below) and Apache and reflects ongoing discussions the Debtors have had with the official committee of unsecured creditors (the ‘Committee’), the Debtors’ regulators, including representatives from the Bureau of Ocean Energy Management (‘BOEM’), the Bureau of Safety and Environmental Enforcement (‘BSEE’), the Department of Interior and the Department of Justice, the FLFO Lender and other key constituencies."
The Disclosure Statement continues: “Pursuant to the RSA by and among the Debtors, lenders holding approximately 76.75% of the Company’s debt under the FLTL Credit Agreement (the ‘Consenting FLTL Lenders’), lenders holding approximately 28.91% of the Company’s debt under the SLTL Credit Agreement (the ‘Consenting SLTL Lenders,’ and, together with the Consenting FLTL Lenders, the ‘Consenting Creditors’) and Apache (together with the Debtors, the Consenting Creditors and any subsequent person or entity that becomes a party to the RSA, the ‘RSA Parties’), the RSA Parties agreed to support the transactions set forth in the restructuring term sheet attached as Exhibit A to the RSA (the ‘Restructuring Term Sheet’) and the term sheet memorializing the agreement between certain of the Debtors and Apache and certain of its affiliates regarding the framework for a restructuring with respect to the Legacy Apache Properties (as defined below) (the ‘Apache Term Sheet’).
Consistent with the RSA, and as discussed in greater detail below, the Plan provides for, among other things, the following transactions to occur on the Effective Date for the below categories of assets and related liabilities:
- Specified Deepwater Assets and Shelf Assets: The Debtors will consummate the sale of certain of their assets, including specified Deepwater Assets and Shelf Assets (each defined below), (collectively, the ‘Purchased Oil & Gas Lease Interests’) to a new entity (‘Credit Bid Purchaser’) formed at the direction of the Consenting FLTL Lenders for aggregate consideration consisting of (i) a credit bid of the Allowed FLTL Secured Claims in the amount of $426 million (which amount may be increased up to the FLTL Claims Allowed Amount), (ii) cash in the amount of approximately $224 million and (iii) the assumption of certain liabilities set forth in the Credit Bid Purchase Agreement (the ‘Credit Bid Transaction’). A schedule of the oil and gas leases constituting the Purchased Oil & Gas Lease Interests is annexed hereto as Exhibit C (which may be amended, modified or supplemented from time to time).
- Legacy Apache Properties: After the consummation of the Credit Bid Transaction, FWE will implement a divisive merger pursuant to which FWE will be divided into Fieldwood Energy I LLC (‘FWE I’) and Fieldwood Energy III LLC (‘FWE III’). Through the divisive merger, FWE I will be allocated and vested with certain assets FWE acquired from Apache (the ‘Legacy Apache Properties’) and related liabilities and obligations. FWE I will, among other things, own, operate, plug and abandon and decommission the Legacy Apache Properties. A schedule of the oil and gas leases related to the Legacy Apache Properties is annexed hereto as Exhibit D (which may be amended, modified or supplemented from time to time).
- FWE III Properties: Through the divisive merger, FWE III will be allocated and vested with all of FWE’s assets other than the Purchased Oil & Gas Lease Interests, Legacy Apache Properties and Abandoned Properties (defined below) (the ‘FWE III Properties’). FWE III will, among other things, own, operate, plug and abandon and decommission the FWE III Properties and related assets and liabilities. The oil and gas leases related to the FWE III Properties includes those listed on the schedule annexed hereto as Exhibit E (which may be amended, modified or supplemented from time to time).
- Abandoned Properties: Immediately upon the occurrence of the Effective Date, certain of the Debtors’ assets (the ‘Abandoned Properties’) will be abandoned pursuant to sections 105(a) and 554(a) of the Bankruptcy Code to entities who are predecessor owners in the chain of title or co-working interest owners (collectively, the ‘Predecessors’). A schedule of the oil and gas leases related to the Abandoned Properties is annexed hereto as Exhibit F (which may be amended, modified or supplemented from time to time).”
The following is a summary of classes, claims, voting rights and expected recoveries (defined terms are as defined in the Plan and/or Disclosure Statement):
- Class 1 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 2 (“Priority Non-Tax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 3 (“(FLFO Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan. The aggregate amount of claims is $138,599,082.31 and expected recovery is 100%.
- Class 4 (“FLTL Secured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $426,000,000.00 and expected recovery is 100%. Each Holder will receive its Pro Rata Share of 100% of the New Equity Interests, subject to dilution by (i) the Backstop Commitment Premium Equity Interests, (ii) the New Equity Interests issued upon the exercise of the New Money Warrants and (iii) by any New Equity Interests issued pursuant to the Management Incentive Plan.
- Class 5 (“SLTL Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $517,500,000.00 and expected recovery is [●]%. Each Holder will receive its Pro Rata Share of the General Unsecured Claims Cash Pool (along with Class 6).
- Class 6 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is [●] and expected recovery is [●]%. Each Holder will receive (i) its Pro Rata Share of the General Unsecured Claims Cash Pool (along with Class 5); and (ii) its Pro Rata Share of the Residual Distributable Value.
- Class 7 (“Intercompany Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 8 (“Subordinated Securities Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
- Class 9 (“Intercompany Interests”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
- Class 10 (“Existing Equity Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
Exhibits Attached to the Disclosure Statement [Docket No. 723]:
- Exhibit A: Plan
- Exhibit B: Plan Release Provisions
- Exhibit C: Leases Related to Purchased Oil & Gas Lease Interests
- Exhibit D: Leases Related to FWE I Oil & Gas Lease Interests
- Exhibit E: Leases Related to FWE III Oil & Gas Lease Interests
- Exhibit F: Leases Related to Abandoned Properties
- Exhibit G: Apache Term Sheet Implementation Agreement
- Exhibit H: Organizational Chart
- Exhibit I: Liquidation Analysis (to be filed)
- Exhibit J: Valuation Analysis (to be filed)
- Exhibit K: Financial Projections (to be filed)
- Exhibit L: First Lien Exit Facility Term Sheet (to be filed)
- Exhibit M: Second Lien Exit Facility Term Sheet
- Exhibit N: Credit Bid Purchase Agreement (to be filed)
Proposed Key Dates
- Disclosure Statement Hearing: February 3, 2021
- Bid Deadline: February 26, 2021
- Voting Deadline: March 9, 2021
- Plan Objection Deadline: March 9, 2021
- Confirmation Hearing: March 17, 2021
A notice filed on January 2, 2021 sets the hearing on the adequacy of the Debtors' Disclosure Statement for February 3, 2021. Objections to the Disclosure Statement are due by February 1, 2021 [Docket No. 733].
About the Debtors
According to the Debtors: “Fieldwood Energy is a premier independent E&P company in the Gulf of Mexico. With operations in both the United States and Mexico, Fieldwood is focused on the exploration and development of offshore oil and gas assets in the Shallow and Deepwater Gulf of Mexico and the Gulf Coast region.
Since our inception in 2013, Fieldwood has grown to become one of the largest producers of oil and gas in the Gulf of Mexico, a region that is our heritage and integral to the DNA of our management and staff. Our people, partnerships and unwavering commitment to operational excellence and safety are the foundations of our success and continued growth.
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