Leading an Out-of-Court Restructuring for an Exploration and Production Operator
With our support, the company was able to reach an out-of-court restructuring transaction, reducing its funded debt by over 90%.
Challenge
A confluence of headwinds, including demand fluctuations resulting from COVID-19 and the supply shock stemming from the oil price war between Russia and Saudi Arabia, led to a crash in crude prices in the first quarter of 2020. This drop in crude—which briefly dipped below zero—coupled with high fixed operating costs, led an exploration and production operator with assets along the Gulf Coast to experience severe liquidity pressures.
How We Helped
Our company was engaged to provide assistance with liquidity management, including cash flow forecasting and vendor oversight, while the company worked toward an out-of-court solution for the restructuring of its debt. Concurrently, we prepared the company for a potential bankruptcy filing in the event that the out-of-court process failed. As part of this process, we prepared pleadings and developed a comprehensive bankruptcy strategy.
Throughout the process, we worked closely with the company’s management team and counsel to identify a consensual restructuring solution to benefit all stakeholders involved. In daily calls with management, we led the deliberation of both the in- and out-of-court solutions and helped make tactical decisions on negotiating various approvals from the lender group.
Results
With our support, the company was able to reach an out-of-court restructuring transaction, reducing its funded debt by over 90%. Our liquidity and treasury management—including vendor strategy development—contributed to securing the liquidity needed to pursue this solution. Following the transaction, management was able to retain ownership of the business.