Houston-based Swift Energy filed for Chapter 11 bankruptcy last week in Delaware, the latest casualty of low oil prices.
Swift Energy and eight of its subsidiaries filed voluntary petitions on December 31 for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Delaware.
The company will continue normal operations as it moves forward with its bankruptcy case and also expects that it will be able to make royalty payments and payments to working interest owners.
Swift added that employees will continue to be paid “in the ordinary course” and should expect “no change in their daily responsibilities.”
According to the The Times-Picayune, the company has more than $1.2 billion in debt on its books.
Swift Energy said it has arranged up to $75 million of debtor-in-possession financing from a group of senior noteholders to provide additional liquidity to fund the business through the Chapter 11 process.
The company expects to restructure, amend or refinance its pre-petition $330 million secured revolving credit facility as part of its plan of reorganization.
Swift Energy also reached an agreement with holders of a majority of its senior notes to convert all senior notes to equity pursuant to the terms of a restructuring support agreement signed on December 31.
Under the agreement, existing equity holders will retain four percent of the company’s equity on a fully diluted basis, subject only to dilution as a result of a proposed new management incentive program.
Existing equity holders will also receive warrants for up to 30 percent of the post-petition equity that can be exercised when Swift reaches certain benchmarks set out in the terms of the warrants.
“The company had to take action in response to the significant reduction in oil and gas prices that the entire industry has been facing. I am pleased we were able to reach this comprehensive reorganization plan with senior noteholders holding a majority of those notes,” Swift Energy president and CEO Terry E. Swift said.
Last Thursday, the copmany also reached an agreement to sell a 75 percent stake in its South Bearhead Creek Field and Burr Ferry Field areas in Central Louisiana to Texegy LLC for an undisclosed sum.
Closing is anticipated to occur on or before March 15, 2016, subject to bankruptcy court approval and customary closing conditions.
SV Energy Company, an affiliate of Texegy, will serve as the operator of the properties, conducting all drilling, completion and production operations.
Swift Energy’s oil and gas operations are focused along the U.S. Gulf Coast in the onshore and inland-water areas of Louisiana and Texas with assets in South Texas, Southeast Louisiana, and Central Louisiana.