Enduro lined up four stalking-horse bidders—the most recent being Comstock Resources—after a prior reorganization failed to remedy its financial woes. (Source: Hart Energy and Shutterstock.com)
Bankrupt Enduro Resource Partners LLC is liquidating its assets after trying to right its finances in 2016 and has lined up initial stalking-horse bids on properties that total $97.5 million.
The Riverstone-backed company is selling positions in North Dakota, Wyoming and Louisiana as well as Texas and New Mexico areas associated with the Permian Basin.
Enduro and its subsidiaries submitted an asset sales plan to a U.S. bankruptcy court judge in Fort Worth, Texas, in May to approve stalking-horse bid arrangements. The company is seeking to have the sales process approved by the court before July, which will allow other potential buyers to make bids.
On June 6, Enduro received a bid from Comstock Oil & Gas-Louisiana LLC, subsidiary of Comstock Resources Inc. (NYSE: CRK), to purchase its Cotton Valley and Haynesville Shale assets for $20 million.
Other stalking-horse bidders include Cobra Oil & Gas Corp., which is offering $45 million for assets primarily in North Dakota. Evolution Petroleum Corp. is offering $27.5 million for assets in the Permian Basin and some Louisiana acreage. Mid-Con Energy Properties LLC offered $5 million for the Wyoming assets.
Total acreage and production figures were not included in the initial sales agreements filed in bankruptcy court.
Comstock’s June 6 offer encompasses Enduro’s Louisiana assets, which are largely in Caddo and De Soto parishes, according to Enduro’s court filings.
Most of the bids were arranged prior to entering a Chapter 11 reorganization bankruptcy. Enduro said it would convert to a Chapter 7 liquidation bankruptcy and projected a confirmation of its sales plan by July 30. The company said in May it followed an extensive marketing and sales process of its assets.
Enduro Royalty Trust, a publicly traded Delaware company, is not part of the bankruptcy process. Enduro said it expects the purchaser of its trust units to assume Enduro’s responsibilities with the trust.
Enduro’s bankruptcy follows a previous attempt by the company to remedy its financial woes with an out-of-court reorganization in 2016, which included a lowering of its debt service payments.
In September 2017, Enduro also sold Permian assets in New Mexico and Texas for $49.1 million. The company used proceeds from the transaction and cash on hand to pay down $10 million of its debt.
Overall, the energy industry has been hit hard by the 2014 collapse in oil prices, which led to 144 oil and gas producers succumbing to bankruptcy since the beginning of 2015, according to law firm Haynes and Boone LLP.
Haynes and Boone said the number of E&P bankruptcy filings is on a decreasing trend though, with 67% fewer filings in 2017 than 2016. As of March 31, six producers had filed for bankruptcy so far this year, but that number has since increased with three others entering bankruptcy in May: Enduro, Nighthawk Production LLC and Rex Energy Corp.
RELATED: Bankrupt Rex Energy To Sell Remaining Assets
As part of its bankruptcy, Enduro reached an agreement with its first lien lenders to utilize their cash collateral to fund the company through the sale process.
The company retained Latham & Watkins LLP and Young Conaway Stargatt & Taylor LLP as co-counsel. Evercore Group LLC was Enduro’s financial adviser and Alvarez & Marsal North America LLC was its restructuring adviser.
Darren Barbee can be reached at dbarbee@hartenergy.com.
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