EP Energy files for Chapter 11 bankruptcy

January 2020 | DEALFRONT | BANKRUPTCY & CORPORATE RESTRUCTURING

Financier Worldwide Magazine

January 2020 Issue

In pursuit of a financial restructuring, US oil and gas producer EP Energy Corporation has voluntarily filed petitions for Chapter 11 reorganisation in the US Bankruptcy Court for the Southern District of Texas.

EP Energy intends to use the Chapter 11 process to reduce its debt significantly, strengthen its balance sheet and better position itself for the long-term. Despite some disruption, EP Energy has stated that it remains focused on capital efficiency, operational execution and operating its business in the normal course during the court-supervised process. The company has received the consent of its lenders to use cash on hand and cash flow generated by the company’s ongoing operations to support the business.

Focusing on enhancing the value of its high-quality asset portfolio, increasing capital efficiency, maintaining financial flexibility, and pursuing accretive acquisitions and divestitures, Houston-based EP Energy works to set the standard for efficient development of hydrocarbons in the US.

“The Chapter 11 process will allow us to pursue a significant reduction of our debt in order to enhance EP Energy’s long-term competitive position,” said Russell Parker, president and chief executive of EDP Energy. “Our business operations are expected to continue without interruption throughout this process, during which we will continue making improvements to our operational execution and capital efficiency.”

Mr Parker assumed the president and chief executive positions in 2017, having previously served as chief executive of Phoenix Natural Resources.

EDP Energy’s decision to undertake a financial restructuring follows a comprehensive review by a special committee of independent members of EP Energy’s board of directors, as well as extensive, ongoing discussions with its creditors.

“Over the coming days and weeks, we will continue working with our creditors and stakeholders to propose a plan of reorganisation that will considerably strengthen our balance sheet and provide the financial flexibility to continue building our business through the current market environment,” added Mr Parker. “Like other companies in our industry, we continue to experience challenging dynamics as a result of depressed commodity prices, and we have been very transparent about our ongoing efforts to actively manage our capital to control spending and preserve liquidity.”

Alongside its Chapter 11 filing, EDP Energy has filed a number of customary motions with the court seeking authorisation to support its operations while the process is ongoing, including authority to continue to make payments to lessors and royalty owners in the ordinary course of business. The company also expects to pay vendors in full for goods and services provided.

Serving as EDP Energy’s legal counsel is Weil, Gotshal & Manges LLP. Evercore LLC is serving as financial adviser and FTI Consulting, Inc. is serving as restructuring adviser.

Mr Parker concluded: “The EP Energy board and management team are confident in the strength of our assets and the future of our business. We would like to thank all our employees for their continued dedication. Our entire team is focused on running the company and we are committed to working with our vendors, royalty owners, lessors and business partners just as we always have.”

Fraser Tennant