Samson, Magnum Hunter End $17M Claims Fight in Del. Ch. 11
Samson Resources Co. withdrew more than $16.8 million in oil and gas well claims against a bankruptcy successor to Magnum Hunter Resources late Thursday, citing an earlier settlement deal to wind up loose ends trailing both companies' confirmed Chapter 11 reorganization plans.
The deal between Samson and what is now Blue Ridge Mountain Resources Inc. allowed for the release to Samson of $3 million in disputed escrow funds, according to a settlement agreement filed with Samson's case. Another $4 million will be paid to Samson over a six-month period, in addition to Blue Ridge's withdrawal of a $9 million administrative claim against Samson, according to court filings.
U.S. Bankruptcy Judge Christopher S. Sontchi approved Samson's bankruptcy plan on Feb. 13, the same day that Samson and Blue Ridge entered into their global settlement of disputes, which arose from joint operations of 122 North Dakota wells.
Earlier this month, Samson and Bakken Hunter LLC, another Magnum bankruptcy affiliate, agreed to the termination with prejudice of a Samson lawsuit seeking to recover the $16.8 million, saying that they ended the suit "on behalf of themselves and all affiliates interested in these proceedings."
The global settlement prompting the lawsuit termination "will provide the parties with a fresh start regarding the operation of the North Dakota wells and will remove the expense and distraction on both sides of continuing this dispute," both sides said in a supporting statement.
U.S. Bankruptcy Judge Kevin Gross confirmed Magnum Hunter's more than $1 billion Chapter 11 plan last April, with the company's secured debt converted to equity and prepetition stockholders wiped out.
Samson's $4.2 billion bankruptcy reorganization, involving a much larger oil and gas well operation, won Judge Sontchi's approval on Feb. 13. A large share of the company's operation, spread across 12 states, was sold during the 17-month process.
Both companies said they were victims of a deep and lingering global slump in oil and gas prices that left debt-burdened energy business no alternative to seeking protection from creditors through the federal courts. Both also are continuing to work through the aftermath of their cases and plan confirmations.
For Samson, the plan approval left for another day the sorting out of more than $80 billion in asserted royalty claims by landowners who leased oil and gas rights to Samson interests over the years. Heirs to one family alone asserted about $2 billion in claims, although the company said it believes that it pulled only a fraction of that amount of hydrocarbons from the ground since January 2014.
Judge Sontchi said at the time that the decision on the Chapter 11 plan's feasibility and its confirmation would not affect the subsequent claim disputes or decisions on their merits.
Oil well royalties, joint operating agreements and shared use of "midstream" pipelines have snarled other energy-related bankruptcy reorganizations as well.
Emerald Oil Inc., which recently had its Chapter 11 plan confirmed, battled for months with Dakota Midstream LLC over an oil pipeline transportation agreement. Emerald eventually agreed to pay Dakota $2 million and granted the pipeline venture a 5 percent stake in the reorganized company to settle Dakota complaints that the oil company improperly cut off use of and payments to the pipeline business.
Samson is represented by Domenic E. Pacitti, Michael W. Yurkewicz and Morton Branzburg of Klehr Harrison Harvey Branzburg LLP and Paul M. Basta, Edward O. Sassower, Joshua A. Sussberg, James H.M. Sprayregen, Ross M. Kwasteniet and Brad Weiland of Kirkland & Ellis LLP.
Magnum Hunter's creditor trustee is represented by Norman L. Pernick and Patrick J. Reilley of Cole Schotz P.C. and Mark I. Bane, James A. Wright III and Martha E. Martir of Ropes & Gray LLP. The reorganized company is represented by Laura Davis Jones, Colin R. Robinson and Joseph M. Mulvihill of Pachulski Stang Ziehl & Jones LLP and Edward O. Sassower, Brian E. Schartz, James H.M. Sprayregen, Justin R. Bernbrock and Alexandra Schwarzman of Kirkland & Ellis LLP.
The adversary case is Samson Resources Co. v. Bakken Hunter LLC, case number 1:16-ap-50990, in the U.S. Bankruptcy Court for the District of Delaware.
REPRINTED WITH PERMISSION FROM THE MARCH 24, 2017 EDITION OF LAW360 © 2017 PORTFOLIO MEDIA INC. ALL RIGHTS RESERVED. FURTHER DUPLICATION WITHOUT PERMISSION IS PROHIBITED. WWW.LAW360.COM
