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Samson Nets $660M In Series of Ch. 11 Asset Sales

Bankrupt oil and gas driller Samson Resources Corp. received court approval Wednesday in Delaware on a series of asset sales that will net the company nearly $660 million, paving the way for a planned debt-for-equity swap that will reorganize the company's $4 billion in debt.
U.S. Bankruptcy Judge Christopher S. Sontchi signed off on the sale of six packages of oil and gas assets after disputes over allegedly unpaid royalties were resolved. The bundles of assets stretch across the U.S. and infuse $657.7 million into the company's estate. Samson plans on converting its second-lien notes into equity in a reorganized company.
The royalty dispute arose from the U.S. Department of the Interior's contention that Samson had underpaid royalties for 272 wells located on federal and tribal land by as much as $66 million. As negotiations between the company and the federal government continued over the past few weeks, the figure dwindled to less than $250,000. A stipulation proposed Wednesday by the parties would resolve the dispute.
"The parties have worked cooperatively and in good faith in connection with a compliance review conducted by DOI to identify any unpaid royalties or other amounts due under federal and tribal leases," the stipulation said.
A review of bank accounts indicated that if there are indeed any unpaid royalties, the amount is less than $213,000. In the stipulation, Samson and the government agreed to resolve the issue with the company paying $9,739.89 to the Department of Interior within five business days of it being approved by the court.
If any unpaid royalty amounts are uncovered during the remainder of the compliance review, Samson will remit that amount once the leases are assumed and assigned, with the consent of the DOI.
The six asset silos represent more than 8,700 wells across the U.S. and had received preliminary approval from Judge Sontchi pending resolution of the royalty issues.
The six sales consist of Samson's Williston assets in North Dakota, and some in Montana, to Resource Energy Can-Am LLC for $75 million; its Permian mineral assets in Texas and New Mexico to Stone Hill Minerals Holdings LLC for $51.7 million; its San Juan assets in New Mexico, and parts of Colorado, to the Southern Ute Indian Tribe, doing business as Red Willow Production Co., for $116 million; its west Anadarko assets to Tecolote Holdings LLC for $131 million; its central Anadarko assets to Fairway Resources Partners III LLC for $132 million; and its east Anadarko assets to Rebellion Energy LLC for $152 million, according to court records.
Representatives for Samson did not immediately respond late Wednesday to requests for comment.
Samson envisions debt conversion for its second-lien notes, but has lost its exclusive right to file a plan of reorganization. Unsecured creditors who intend to challenge the secured liens in the case have already floated a plan of their own.
Samson filed for Chapter 11 protection in September 2015, listing more than $4 billion in debt and citing many of the same bearish forces in the energy commodity market that have sent many of its peers flocking into bankruptcy court.
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 government is represented by Ruth A. Harvey, Margaret M. Newell and Mary A. Schmergel of the U.S. Department of Justice.
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.