Independent Party Renegotiates Contracts to Stabilize Company

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. 7o0 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 default, had settlement issues and 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.

Mark J. Welch

Mark J. Welch, CPA, CTP is a Principal at MorrisAnderson based in Pittsburgh. He has over 20 years in bankruptcy and restructuring experience especially in leadership roles and fiduciary positions with clients. Prior to joining MorrisAnderson, Mark was the Director of Internal Audit at Southern Air Transport, Inc., a mid-sized cargo air-transport airline. He also Read More

Jeffrey A. Beunier

Jeffrey A. Beunier, CPA, CIRA, is a Consultant at MorrisAnderson with extensive accounting- and finance-related experience. Over the course of his career, he has originated and underwritten more than $300 million in investment transactions. Jeffrey began his career working in auditing at KPMG, LLP. Subsequent to KPMG, Jeffrey held senior positions at Summit Investment Management, Read More