Ascent Resources Marcellus Holdings LLC and its subsidiaries (ARM), successor companies that had their beginnings with the late Aubrey McClendon, have filed for Chapter 11 bankruptcy protection.
The filing, Ascent said, is a negotiated agreement reached with first and second lien term loan holders to restructure the balance sheet, reduce long-term debt and improve liquidity. Combined, the company owes more than $1 billion on the first and second lien loans.
“The ARM restructuring is not an operational restructuring and is not intended to restructure or compromise any vendor, service provider, contractor, lessor, working interest owner or royalty owner obligations,” the company said, adding that all vendors and service providers would be paid in the normal course of business.
ARM operates more than 40,000 acres in West Virginia. The bankruptcy proceedings do not involve Ascent Resources LLC or other affiliates that oversee Utica Shale operations in Ohio. ARM, which also includes Ascent Resources Marcellus LLC and Ascent Resources Marcellus Minerals LLC, said it has enough votes from the first and second lien creditors to earn approval of the restructuring plan in the U.S. Bankruptcy Court for the District of Delaware.
The company expects the proceedings to last for up to 60 days. When it emerges, a new board of directors is to be appointed and the existing management team is to continue overseeing daily operations.
The Ascent companies got their start in 2013. McClendon, the former Chesapeake Energy Corp. co-founder and CEO who died in a car crash in 2016, founded the now defunct American Energy Partners LP (AELP) to develop affiliates across the country with basin-specific strategies. AELP created a predecessor, which was later separated into a privately held standalone company, renamed Ascent and divided into the Marcellus and Utica units.
The entities are still run by CEO Jeff Fisher, a McClendon protege, and other former Chesapeake executives.