Less than four months after voluntarily filing for bankruptcy protection, Swift Energy Co. emerged from Chapter 11 on Monday and closed on a new $320 million senior secured credit facility, while also forming a joint venture (JV) and closing on the sale of some conventional oil assets in central Louisiana.
According to an 8-K filing with the U.S. Securities and Exchange Commission (SEC), approximately $906 million of Swift's outstanding debt from senior notes and other unsecured claims will be exchanged for 88.5% of the Houston-based company's post-emergence common stock. The reorganization plan also calls for parties in a debtor-in-possession (DIP) financing agreement from January to receive a backstop fee of 7.5% of the new common stock. The lenders also agreed to convert the entirety of the $75 million DIP loan to equity that will be paid in Swift's new common stock, which will come from the aforementioned 88.5% common stock pool.
Under the reorganization, all pre-emergence outstanding common stock was cancelled and current shareholders were to receive 4% of the new common stock and certain warrants. The 8-K added that "RBL [reserve-based lending] secured claims will be refinanced through a $320 million reserve-based exit loan that will be used, among other things, to fund the debtors' obligations under the plan and the reorganized debtors' operations" after the company's emergence from Chapter 11.
Swift voluntarily filed for bankruptcy protection on New Year's Eve, and first announced plans to exit Chapter 11 at the beginning of April (see Shale Daily, April 1; Jan. 4).
"With our emergence comes a new era for Swift, and while we are excited to have this process behind us, we must continue in our efforts to further improve our operations and maximize the value of our assets," said CEO Terry Swift. "We face the future with a renewed sense of energy and enthusiasm and look forward to working with our new board of directors and investor base to execute on our strategic plans."
Meanwhile, Swift announced that it had closed on a deal to sell a 75% interest in some of its conventional oil-weighted properties in central Louisiana to Texegy LLC for an undisclosed sum. The sale, first announced by Swift prior to its filing for bankruptcy, includes holdings in the South Bearhead Creek and Burr Ferry fields.
Swift and Texegy also signed a joint development agreement and a joint operating agreement, under which SV Energy Co. LLC, a Texegy affiliate, will serve as operator of the acquired assets and conduct all drilling, completion and production operations there.
"This transaction allows us to strengthen our liquidity profile while providing for a partnership that is well suited for growth opportunities in the region," Terry Swift said. "Both sides worked diligently to bring this transaction to a close, and I am confident that together we can optimize the value of these assets."
Texegy CEO Rajan Ahuja added that the acquired assets "are the kinds...that Texegy focuses on acquiring: conventional oil and gas producing assets with significant upside. We are confident that we can simultaneously increase daily production and reserves in the ground at reasonable cost which will prove profitable, even at a $40 oil price."
Texegy was formed in late 2014 to acquire, operate, and develop producing conventional oil and gas properties in Texas and Louisiana. Its acquisition from Swift includes 62,000 acres of mineral servitude.
Swift said it would primarily use net proceeds from the sale to reduce its borrowings under the company's credit facility prior to its emergence from Chapter 11, and for other general corporate purposes.