Coho Energy Inc. has completed the sale of all of its oil and gas properties for an aggregate sales price of approximately $222 million in cash. The company sold its properties in two separate transactions to Citation Oil & Gas Corp. and Denbury Resources Inc.

Citation and Denbury were winners in the auction held in the U.S. Bankruptcy Court in Dallas on June 27 for the sale of all of Coho’s oil and gas properties. Citation made the winning bid of $165.5 million for Coho Energy’s oil and gas properties located in Oklahoma and Red River County, TX, while Denbury was the winning bidder for properties located in Mississippi and Navarro County, TX with a bid price of $50.3 million.

The claims of creditors of Coho Energy that have liens against properties will receive payments on allowed claims in accordance with rulings from the bankruptcy court, the company said. Liens on the properties sold attach to the sale proceeds paid to Coho Energy at closing.

However, because the estimated claims of Coho Energy’s creditors in its bankruptcy proceedings are believed to be in excess of $335 million, it is unlikely that Coho Energy’s shareholders will receive any distribution upon liquidation of the company. The company said it intends to file a plan of liquidation no later than Oct. 31. Creditors with allowed claims that do not attach to the sale proceeds will receive distributions pursuant to Coho Energy’s plan of liquidation after approval by the bankruptcy court.

The Dallas-based independent and two of its subsidiaries, Coho Resources Inc. and Coho Oil & Gas Inc., filed in February for voluntary bankruptcy protection under Chapter 11 citing inadequate liquidity and capital resources and extreme indebtedness (see NGI, Feb. 11).

The company said the timing of its bankruptcy was dictated mainly by a notice of default on Feb. 1 by the holders of the company’s senior debt. Coho had been in trouble for some time as low oil and gas prices and declining production cut into its cash flow.

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