Houston-based Swift Energy – an oil and gas exploration company operating in Texas and Louisiana – is the latest victim of the downturn, having filed for relief under Chapter 11 of the U.S. Bankruptcy Code in U.S. Bankruptcy Court for the District of Delaware. On Tuesday, 5th January, the company received U.S. bankruptcy court approval to borrow up to $15 million, facilitating the much needed restructuring.
The company, which on December 31st announced that it reached an agreement with holders of a majority of its senior notes to convert all senior notes to equity, has also arranged up to $75 million of debtor-in-possession (DIP) financing from a group of senior noteholders to provide additional liquidity to fund the business through the Chapter 11 process.
The Company expects to restructure, amend or refinance its pre-petition $330 million secured revolving credit facility as part of its plan of reorganization.
The agreement with the senior noteholders provides for the executive management team to retain their positions upon the completion of the Chapter 11 process. Terry E. Swift, President and Chief Executive Officer, is also to retain a director position upon completion of the Chapter 11. A new non-officer Chairman of the Board is to be appointed by the new majority equity group, along with new board members that will comprise a majority of the new Board of Directors. Pursuant to the RSA, Dean Swick, Managing Director at Alvarez and Marsal has been appointed to act as Chief Restructuring Officer (CRO) during the reorganization process.
“The Company had to take action in response to the significant reduction in oil and gas prices that the entire industry has been facing. I am pleased we were able to reach this comprehensive reorganization plan with senior noteholders holding a majority of those notes. We expect that Swift will exit bankruptcy with a greatly improved balance sheet and additional liquidity to realize the full potential of our assets for all stakeholders, while having sufficient funding to maintain, if not improve our asset base during the Chapter 11 process,” said Terry E. Swift.
The company expects to continue operations in the normal course during the pendency of the bankruptcy case, and anticipates making royalty payments and payments to working interest owners when due. Furthermore, the company assured its employees that they should expect no change in their daily responsibilities and to be paid in the ordinary course.
According to Reuters, 2015 saw around 40 companies file for bankruptcy after oil prices plunged more than 60 percent since June 2014.
Article continues below this message
Have your opinion heard with Shale Gas International
We accept interesting, well-written opinion and analysis articles of up to 1,500 words, that offer unique insights into the shale industry. The articles cannot be overtly promotional in nature and need to fit into at least one of our content categories.
If accepted, the article must be exclusive to Shale Gas International website and cannot appear on any other websites, publications, etc. Each article may contain up to three links to external websites relevant to the content discussed in the piece.
If you would like to contribute to Shale Gas International website, please contact us at: editor[at]mw-ep.com