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Law360 (August 4, 2020, 11:54 AM EDT) -- Gulf of Mexico oil and gas exploration company Fieldwood Energy LLC filed for Chapter 11 protection in Texas along with more than a dozen affiliates, marking its second bankruptcy case since 2018 as global energy prices continue to stagnate due to slackening demand driven by the COVID-19 pandemic.
In initial court filings, Fieldwood Energy said it had about $1.8 billion in funded debt and would be asking for court permission to borrow up to $100 million in debtor-in-possession financing administered by Cantor Fitzgerald Securities to fund its case.
At first-day hearings on Tuesday afternoon, U.S. Bankruptcy Judge Marvin Isgur approved the financing despite questions about the approximately $9 million in fees, although he did delay the draw until Aug. 11 to allow more time for interested parties to look at the terms.
"It's not available at a cheaper price," he said.
At the hearing, counsel for Fieldwood said the company began talks with creditors in March, when the effects of plunging oil prices and the COVID-19 pandemic began to make themselves felt, ultimately reaching a restructuring agreement with the holders of about two-thirds of its first lien term loan facility.
The restructuring will involve the sale or equitization of the company's deepwater assets and assets purchased from Apache Corp. in 2013 — representing about two-thirds of its coastal shelf assets — to shift to a reorganized Fieldwood, company counsel Alfredo Perez said.
Perez added the company hopes to emerge from bankruptcy by the first quarter of 2021.
In 2018, Fieldwood confirmed a Chapter 11 plan that slashed $1.6 billion from its balance sheet while also allowing for a new rights offering that enabled the company to raise more than $500 million to acquire the offshore drilling assets of competitor Noble Energy Inc.
Fieldwood was established at the end of 2012 as a portfolio company of certain Riverstone Holdings energy funds and capitalized in September 2013 with an acquisition of assets from Apache Corp. It later acquired additional assets from SandRidge Energy Inc. The debtors' assets consist primarily of producing oil and natural gas properties located offshore in the Gulf of Mexico, where it claims the title of largest facility, pipeline and well owner.
When it filed for bankruptcy the first time in 2018, Fieldwood had close to $3.3 billion in funded debt, and it cited pressure from a downturn in crude oil prices beginning in 2014.
The current energy commodity picture remains depressed as demand for oil and gas products cratered due to the COVID-19 outbreak and subsequent reductions in travel. A pricing war earlier this year among Saudi Arabia and Russia led to further declines in pricing.
The company has retained Houlihan as its investment banker and AlixPartners as its restructuring adviser.
Fieldwood is represented by Alfredo R. Perez, Matthew S. Barr and Jessica Liou of Weil Gotshal & Manges LLP.
The lead case is In re: Fieldwood Energy LLC, case number 20-33948, in the U.S. Bankruptcy Court for the Southern District of Texas.
--Additional reporting by Rick Archer. Editing by Rebecca Flanagan.
Update: This story has been updated with additional information from court documents and the first-day hearing.
For a reprint of this article, please contact reprints@law360.com.
