Financially troubled Samson Resources Corp. has made a restructuring pact that will cut debt and bring at least $450 million of new capital into the company as it prepares for a Chapter 11 filing, the Tulsa-based producer said late Friday.
The restructuring deal is with second lien lenders that hold 45.5% of the second lien obligations and existing equity owners.
Samson is skipping an interest payment due Monday (Aug. 17) and is using "...the 30-day grace period to build broader support for the restructuring and continue efforts to document and ultimately implement the reorganization transaction as part of a Chapter 11 filing," the company said. Samson was pondering bankruptcy earlier this year (see Shale Daily, April 2).
"Samson Resources has been and continues to work closely with its suppliers and business partners to ensure business continues uninterrupted," it said. "The company fully expects and intends to continue producing oil and gas from its existing operations, maintain its current staffing and pay royalties at all times."
Under the terms of the RSA, second lien lenders, including Silver Point, Cerberus and Anschutz, have agreed to invest at least $450 million of new capital to provide liquidity to the balance sheet post-reorganization and permanently pay down existing first lien debt. The additional investment in Samson Resources may be increased in certain circumstances by $35 million to an aggregate of $485 million to further bolster liquidity, the company said.
As part of the restructuring and recapitalization, Samson Resources' second lien lenders, together with the second lien lenders that are backstopping the equity rights offering, will own substantially all of the equity in the reorganized company and all second lien lenders will have the right to participate in the new money investment.
"Although Samson Resources has completed a series of initiatives to strengthen our business during this difficult and extended period of low commodity prices, we -- like many of our peers -- have not been able to overcome industry headwinds that significantly reduced our cash flows, limited our ability to reinvest in our assets and prevented us from selling noncore assets as we had planned," said CEO Randy Limbacher.
Samson has about 1.5 million net acres located in the Williston, Powder River, Greater Green River, San Juan, Anadarko, and East Texas basins.