Stone Energy Files Chapter 11 Bankruptcy to Execute Debt Reduction Plan

by San Antonio Attorney

Stone Energy Corp sought for Chapter 11 protection on Dec. 14 to wipe out an estimated $1.2 billion in liabilities by handing over control of the offshore oil company to its lenders after a two-year crash in energy prices.

The company filed for bankruptcy when the prices of oil started to drop from about a $100 per barrel in 2014.

Court filings reveal that Stone has adequate funds to maintain its operations without having a debtor-in-possession funding during the bankruptcy proceedings, which it expects to get done in 90 days.

While the company has said it has extensive creditor support for its plan, its biggest investor, Thomas Satterfield, has warned that he intends to object to the restructuring plan in court.

In an interview, Satterfield told said disagrees with Stone’s proposal, which involves providing at least 4% of the stock in the restructured company to shareholders.

Noteholders would swap debt for a 96% stake in the energy company.

In addition, they would get $100 million of cash to be derived from Stone’s sale of land in the Marcellus and Utica shale.  The initial plan proposed providing $150 million to noteholders.

Stone plans to ask the court’s permission to sell an estimated 86,000 acres of land in West Virginia and Pennsylvania for a floor price of $350 million.

Stone announced on Dec. 5 that it may discontinue manufacturing at its Amethyst well.

The company has reduced spending and concentrated on high level profits in the Gulf of Mexico to attempt to weather the price crash.  In 2015, it suffered a net loss of $1 billion.  In 2016, the company lost $474 million.

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