Hammered by Prices, TransTexas Files Ch. 11
TransTexas Gas Corp. of Houston said following discussions with
a group representing a majority of its parent company's note
holders it voluntarily filed for Chapter 11 bankruptcy. The company
said it believes the filing will allow for completion of its
recapitalization involving TransTexas and parent, TransAmerican
Energy Corp. Details of the recapitalization plan are expected to
be filed in bankruptcy court within 30 days.
TransTexas said it expects to reach agreement with certain note
holders for debtor-in-possession financing, subject to approval by
the court. Among other capital needs, the financing will allow
TransTexas to continue drilling its development areas, including
the Eagle Bay gas field, producing fields in Wharton County, TX,
and other South Texas properties.
TransTexas said it believes it can improve cash flow through
development drilling in proven producing fields and, with the
commitment of its major creditors, seek court approval of a
restructuring plan. Going forward TransTexas said it will pay all
vendors in the ordinary course of business.
For the quarter ended Oct. 31, 1998, TransTexas reported a net
loss of $147.8 million on revenues of $32.8 million. The results
include the impact of a $164.9 million pre-tax asset write-down to
reflect low oil and gas prices. For the quarter ended Oct. 31,
1997, TransTexas reported a net loss of $1.2 million on revenues of
For the nine months ended Oct. 31, 1998, including the effect of
asset impairments of $186.7 million, TransTexas reported a net loss
of $155.4 million on revenues of $137.7 million compared to net
income of $247 million on revenues of $695 million for the year-ago
period, which included a gain of $540.4 million on the sale of the
company's Lobo Trend subsidiary
Last month, TransTexas said it hired Jefferies & Co. to
review strategic alternatives. At the same time the company said it
was seeking concessions from its note holders.
TransTexas Gas is engaged in the exploration, production and
transmission of gas and oil, primarily in South Texas, including
the Eagle Bay field in Galveston Bay. The first four wells drilled
in Eagle Bay are producing about 75 MMcf/d (gross) of gas and 9,500
b/d (gross) of condensate. TransTexas owns an approximate 56.75%
net revenue interest in the Eagle Bay field.
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