Samson Gets Nod for Air Quality Deal with Ute Tribe

A Delaware bankruptcy judge signed off on a deal Tuesday between the Southern Ute Indian Tribe and bankrupt oil and gas firm Samson Resources Corp. that settles the company's alleged noncompliance with air quality testing reporting requirements for a compressor station on reservation land.
 
In a brief order, U.S. Bankruptcy Judge Christopher S. Sontchi approved a settlement agreement between Samson and the Southern Ute Indian Tribe Air Quality Program — a branch of the tribe’s Environmental Programs Division — that resolves the company’s liabilities to the tribe for the alleged environmental violations.
 
Under the terms of the deal, Samson will pay the tribe an $82,000 civil penalty arising out of an inspection at its Spring Creek Compressor Station on reservation land in La Plata County, Colorado, which is roughly 20 percent less than the $102,500 penalty the tribe initially sought.
 
When requesting approval of the settlement in late June, Samson said the tribe is one of its “most important land owner constituents” and that maintaining a strong relationship with the tribe was a top priority.
 
“The settlement contemplates an agreed reduction in liability of approximately $20,000,” the motion said. “Thus, the settlement simultaneously eliminates the risk of increased liability or potential litigation regarding the circumstances described therein and positions the debtors for positive business relations in the future with the tribe.”
 
According to a court documents, during a March inspection of the Spring Creek Compressor Station, two of the tribe’s air quality specialists concluded Samson was in violation of the Southern Ute Indian Tribe and State of Colorado Environmental Commission’s Reservation Air Code and the terms of conditions of an operating permit from the tribe.
 
Specifically, the specialists concluded Samson had not fulfilled all of its emission testing reporting obligations for the station. The tribe’s Air Quality Program therefore issued a notice of violation to Samson in late May, but the parties began settlement discussions not long afterward.
 
Aside from the civil penalty, Samson will within 90 days of the effective date of the settlement notify the tribe’s Air Quality Program that it has conducted emissions testing at the station and that emission standards have been met.
 
Samson filed for Chapter 11 protection in September, with debts that included a $942 million first-lien revolving credit facility, $1 billion in second-lien term notes and more than $2 billion in senior unsecured notes.
 
Much of the debt carried over from a 2011 leveraged buyout from the founding Schusterman family led by Kohlberg Kravis Roberts & Co. LP affiliates and investors Crestview Partners, Itochu Corp. and Natural Gas Partners.
 
In May, the committee representing Samson’s unsecured creditors filed court papers seeking to terminate the exclusive period in which Samson can submit a Chapter 11 plan.
 
The official committee of unsecured creditors said it has an alternative restructuring proposal that is more fair to all of Samson’s financial stakeholders and would boost recoveries for unsecured creditors.
 
Samson responded in June that the committee’s proposal would “upend a year’s worth of restructuring negotiations” and jeopardize a settlement that would shift some of the company’s debt into equity while providing financing for a stable exit from bankruptcy.
 
The committee’s move, Samson said, amounted to interference with company efforts warranting court sanctions. Judge Sontchi has yet to weigh in on the matter, according to the docket.
 
Representatives for the parties did not respond immediately to requests for comment Wednesday.
 
Samson is represented by James Sprayregen, Paul Basta, Edward Sassower, Ross Kwasteniet, Brad Weiland, Yosef Riemer and Joshua Sussberg of Kirkland & Ellis LLP and Morton Branzburg of Klehr Harrison Harvey Branzburg LLP.
 
The Southern Ute Indian Tribe is represented by Mark L. Desgrosseilliers of Womble Carlyle Sandridge & Rice LLP and Barnet B. Skelton Jr.
 
The case is In re: Samson Resources Corp., case number 1:15-bk-11934, in the U.S. Bankruptcy Court for the District of Delaware.

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