Beleaguered Texas oil and gas company, Quicksilver Resources, received a temporary approval to continue operation from a Delaware bankruptcy judge. The approval allows the company – among other things – to pay employee wages, health benefits, and certain other employee obligations. Additionally, the Company is authorized to honour royalty obligations, working interest obligations, and other obligations related to oil and gas leases.
“The Court’s approval is a positive step forward in our efforts to address current financial challenges and to position Quicksilver as a strong competitor in the oil and gas industry,” said Glenn Darden, Quicksilver’s Chief Executive Officer. “Today’s results will give our employees, suppliers, royalty and working interest owners confidence that our operations will continue without interruption.”
On March 17th, the company and its U.S. subsidiaries each filed a voluntary petition under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the District of Delaware. The chapter 11 cases are being jointly administered under the case number 15-10585.
Glenn Darden said at the time: “Quicksilver’s strategic marketing process has not produced viable options for asset sales or other alternatives to fully address the company’s liquidity and capital structure issues. We believe that chapter 11 provides the flexibility to accomplish an effective restructuring of Quicksilver for its stakeholders.”
Quicksilver’s Canadian subsidiaries were not included in the chapter 11 filing and will not be subject to the requirements of the U.S. Bankruptcy Code. Quicksilver Resources Canada Inc. (“QRCI”) has reached an agreement with its first lien secured lenders regarding a forbearance for a period up to and including June 16, 2015 of any default under QRCI’s first lien credit agreement arising due to the chapter 11 filing. The company does not anticipate that U.S. and Canadian operations will be interrupted as a result of the chapter 11 filing.
Quicksilver moved quite aggressively into the Barnett shale and then struggled with debt once gas and oil prices plummeted. Despite efforts, the company was not able to shift some of its less-commercial assets, such as those in northwest Canada.
Listed among its top 30 creditors are Wilmington Trust National Association ($361.6 million); Delaware Trust Co. ($332.6 million); and U.S. Bank National Association ($312.7 million).
The company also owes millions to several pipeline companies including Oasis Pipeline and Energy Transfer Fuel.
As The Star-Telegram reports, prior to the bankruptcy filing, Crestwood Midstream, which provides gathering and processing services to Quicksilver in the Barnett Shale, said it supported the company’s attempts at restructuring but that it would owe Crestwood $9 million for services in February.
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