💥New Chapter 11 Bankruptcy - Barrow Shaver Resources Company LLC💥
E&P company files to ward off involuntary bankruptcy filing.
On August 19, 2024, Barrow Shaver Resources Co. LLC (“BSR” or the “debtor”), a Texas-based oil and gas exploration (“E&P”) company, filed a chapter 11 bankruptcy case in the Southern District of Texas (Judge Perez). The debtor was founded by two wildcatters, the last of a dying breed of oilmen willing to risk everything on unproven acreage. Big rewards if right. If not? Well … “Between 2023 and 2024, the Debtor conducted an aggressive drilling program in the East Texas Basin. The drilling program resulted in significant capex expenditures that far exceeded the Debtor’s corresponding production gains,” CRO James Katchadurian, a partner at CR3 Partners LLC writes in his first day declaration. BSR could not cover its portion of the tab. In July, a group of creditors — oilfield service companies, the ones who do the dirty work — filed an involuntary petition under chapter 7 on the basis of $8.45mm in outstanding trade claims.
That’s just the tip of the iceberg. While there is no funded secured debt on the debtor’s balance sheet as of the petition date, it did owe a not-insignificant $67mm to its vendors, service providers and suppliers. Several working interest owners did not participate in the drilling program, leaving the debtors to shoulder more of the cost. The debtor also received some $40mm in lien perfection notices. Further complicating matters is a separate and complex issue related to mineral interests and tax payments, in connection with which midstream giant Plains Marketing LLP withheld $2.5mm owed the debtor and filed a complaint. The debtor has submitted a proposed order addressing, in part, the mineral interests situation which, given the adversarial kick-off to this case, understandably drew the ire of the involuntary petitioners. As if that’s not enough drama, there’s also a separate matter about working interest assignment in other East Texas wells, and district court cases concerning leases. This is CERTAINLY not one of those “quality” cases we referred to above.
The debtor seeks DIP financing so that it may undertake an asset sale and confirm a plan of reorganization that will provide “a significant distribution to creditors on account of their allowed claims.” (A presentation at the first day hearing indicated liquidation was also possible.) According to Katchadurian, the debtor has obtained a “firm commitment” for DIP financing from “one interested party.”
Besides CR3 Partners as financial advisor, the debtor is represented by Jones Walker LLP (Joseph E. Bain, Mark A. Mintz, Sean T. Wilson, Olivia K. Greenberg, Elizabeth De Leon).
Company Professionals:
Legal: Jones Walker LLP (Joseph E. Bain, Mark A. Mintz, Sean T. Wilson, Olivia K. Greenberg, Elizabeth De Leon)
Financial Advisor: CR3 Partners (James Katchadurian)
Claims Agent: Kroll (Click here for free docket access)
Other Parties in Interest:
Official Committee of Unsecured Creditors: 5J Oilfield Solutions LLC, Rory Richardson, Top Line Rental LLC
Legal: Faegre Drinker Biddle & Reath LLP (Kristen Perry, Kaitlin Prior, Richard Bernard)
Financial Advisor: Riveron RTS LLC (Paul Jansen)