Warren Resources Inc. said this week that it has emerged from bankruptcy after four months of proceedings, announcing that it would continue to cut costs and saying its new capital structure might even allow the company to expand its asset base.
The company filed for Chapter 11 bankruptcy protection in June to restructure with a debt-for-equity swap with its first lien lender, GSO Capital Partners, of the private equity firm Blackstone Group LP (see Shale Daily, June 3). Last month, the U.S. Bankruptcy Court for the Southern District of Texas approved the plan.
Warren's pre-bankruptcy common stock and preferred stock have been cancelled, and the company said it would issue new stock to its creditors. GSO would take a majority stake in the company. Claren Road Asset Management LLC, a hedge fund owned by the Carlyle Group LP, other investors and Citrus Energy Corp., which was folded into Warren after it acquired the company in 2014, would split the remaining stake (see Shale Daily, July 8, 2014).
The company listed $230 million in assets and debts of $545 million when it filed bankruptcy, according to court documents. CEO James Watt called the proceedings a "painful but necessary" step to "rightsize" the company's debt as the commodities downturn persists. He said the reorganization has positioned the company to "further develop and potentially expand our asset base."
Warren has Marcellus Shale assets in Northeast Pennsylvania, waterflood oilfield recovery operations in California and coalbed methane assets in Wyoming. In a further push to cut costs, the company said it would relocate its corporate headquarters to Dallas and close existing offices in Houston and Plano, TX. The company said it would also reduce leased office space in other locations and maintain a small workforce in Colorado and field offices in California, Wyoming and Pennsylvania.
Before it filed for bankruptcy, the company moved its headquarters from New York City to Denver (see Shale Daily, Oct. 1, 2015). It closed the New York office and another in Roswell, NM, and eliminated staff. The company said it plans to release more details about its restructuring and related agreements in a regulatory filing with the U.S. Securities and Exchange Commission, but it didn't say when those documents would be filed.