Independent Party Renegotiates Contracts to Stabilize Company

500M

Annual Sales

60M

Debt

Abarta, Pittsburgh Pennsylvania

Challenge


Oil & Gas producer in both conventual and non-conventual wells and properties including gathering midstream owned leases located in Kentucky, West Virginia, Pennsylvania and Ohio. Subsidiary of a much larger corporation. 700 wells through 37 projects and basin projects as KY pipeline. $500 million in annual sales. $60 million in debt.


  • Senior bank debt and preferred stock totaling $60 million.
  • Gathering Agreement had defaulted, had settlement issues and was in litigation with Dominion Gas.
  • Partnership issues with joint operator.
  • Well Abandonment liability set at over $100+ million.
  • Liquidity issues caused by down pricing.
  • Ownership and management frustration with the business.

Solution


  • MorrisAnderson was retained as CRO to evaluate going concern situation and determine path forward.
  • Negotiated an extended amendment with senior lender and extension to restructure the operations.
  • Negotiated a forbearance with Dominion to stay litigation under the Gathering Agreement and allow AOG time to restructure.
  • Negotiated with joint operator for release and dissolution of AtGas partnership giving AOG full rights in the largest conventional operations.
  • Reduce LOE’s and operating cost to breakeven with forward sales.
  • Negotiated short-term funding from parent company to complete restructuring plan.

Results


  • Negotiated and agreed to a settlement with senior lender to reduce and restructure senior debt and discount preferred stock ownership.
  • Negotiated full release from joint partner which increased operational value, reduced over $10 million in disputed liabilities and allowed for rights to marker projects and retain sales value.
  • Negotiated contingent resolution and deferment of Gathering Agreement liability.
  • Fully paid back parent borrowings and outstanding commitments by senior lender.
  • Achieved operating breakeven.
  • Sold off idle assets, negotiated resolution with lease holders on material well abandonment charges.
  • Contract with buyer of largest portion of conventional operated and non-operated assets.
  • Retained broker to market all operations.
  • Avoided bankruptcy and other high-cost proceedings. AOG is in a position to payoff all outstanding creditors and pay full severance to employees at completion of sale.