Another struggling energy company with a deep investment in Oklahoma and billions in debt, Breitburn Energy Partners LP based in Los Angeles, California announced in recent days it was missing two interest payments totaling $45.7 million on senior notes due in the next few years.
Breitburn has properties all over western Oklahoma, southwestern Kansas and the Texas Panhandle. In a 2015 statement the company indicated its “most significant Mid-Continent properties are the Postle Field and the Northeast Hardesty Unit, both of which are located in Texas County, Oklahoma.” Breitburn also owns the Dry Trails gas plant located in the Postle Field complex as well as CO2 transportation pipelines from New Mexico to the Postle and Northeast Hardesty fields. It also has interests in 784 productive wells in the Mid-Continent and more than 144,000 gross acres of leasehold acreage.
Breitburn intentionally missed the payments totaling $33.5 million on its 7.875 percent senior notes due April 2022 and an interest payment of nearly $13.2 million on its 8.625 percent senior notes due October 2020.
In a filing with the Securities and Exchanges Commission, the company said it has “elected to utilize the grace period for the Notes as part of its process to explore strategic alternatives to strengthen its balance sheet and maximize the value of Breitburn. Additionally, it has initiated discussions with its secured debtholders related to alternatives to improve Breitburn’s long-term capital structure.”
The SEC filing indicated the company had also hired Lazard Freres and Co. LLC as its financial advisor and Weil, Gotshal and Manges LLP as its legal advisor to the Board of Directors and the management team with the strategic review process.
In recent weeks, the company also agreed to a reduction of its credit agreement from $1.8 billion to $1.4 billion with its lenders and Wells Fargo Bank. However, in Breitburn’s fourth quarter earnings report of 2015, it anticipated such a reduction “if commodity prices remain depressed or further decline.”
The company had a net loss of $902.3 million for the fourth quarter “primarily releated to the impact that further deterioration in forecast future commodity prices had on our projected net revenues for certain of our oil and gas properties.” The more than $900 million loss was on top of the $1.3 billion lost in the third quarter of last year.
