In the News Law360

Samson Set to Seek Final Approval of $660M in Ch. 11 Sales

Samson Resources Corp. is set to seek final approval from the Delaware bankruptcy court Wednesday for a series of asset sales expected to raise nearly $660 million, a task that has eased since a once-$60 million dispute with the federal government has shrunk to perhaps under $1 million.

U.S. Bankruptcy Judge Christopher S. Sontchi has already given Samson the preliminary OK for sale of six different packages of oil and gas assets throughout the United States, ruling they were indeed in the company’s best interests, but conditioning his approval on the debtor hammering out disputes over contracts and creditor payments.

Chief among them was a dispute with the U.S. Department of the Interior, which at one point argued Samson may have underpaid on royalties on federal and tribal land to the tune of up to $66.6 million, but further inquiry in court last week into the government’s objection indicated that it was more likely a $7 million dispute, and counsel for the debtor said during a teleconference Tuesday that the dustup may now be over as little as $250,000.

Judge Sontchi said from the bench Tuesday that he was not planning to cap the Interior Department’s potential cure amount Wednesday, and the hearing was to resolve nagging disputes over language in the proposed sale orders so they could be entered into the court docket.

An order for one of the transactions, the sale of Samson’s so-called Permian mineral assets in Texas and New Mexico to Stone Hill Minerals Holdings LLC for $51.7 million, was already signed by Judge Sontchi, but official approval of the proposed sale order for the other five deals remain pending.

The transactions are not expected to be disrupted by the proceedings, but Samson and its stakeholders must iron out crucial language over details of terms and binding effects that must both be agreed to by the parties and meet the standards in The Bankruptcy Code.

The five sales beside the Permian mineral transaction consist of Samson’s Williston assets in North Dakota, and some of Montana, to Resource Energy Can-Am LLC for $75 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.

The Andarko assets are mostly in Oklahoma, with some areas in Kansas and Texas.

Samson, which operates or has royalty or working interests in about 8,700 oil and gas wells, 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.

Once it puts the sale issues in its rearview mirror, Samson has its sights set on trying to have its Chapter 11 plan, which hinges on a debt-for-equity swap with second-lien lenders, confirmed.

The road may be difficult, however, as the official committee of unsecured creditors aims to challenge many of the secured liens in the case and has already floated its own alternative strategy after Judge Sontchi denied Samson an extension of the period it can be the only entity that proposes a Chapter 11 plan.

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.