The bankruptcy list of energy companies grew by one this week when Fort Worth-based Southland Royalty Company LLC filed Chapter 11 bankruptcy.
The natural gas driller arranged for $35 million in new financing to pay for the court action while it seeks a buyer. Southland owes an estimated $540 million to lenders through a reserve-based credit facility. The company leaders hope to sell the company in bankruptcy or trim its balance sheet.
At least 80% of the company is owned by EnCap Investments LP entities. MorningStar Partners LP owns 20%. Chief Restructuring Officer Frank A. Pometti blamed the bankruptcy on the downturn in energy markets.
Southland was formed in 2015 and received more than $1 billion in commitments during its short life-span. It focused most of its energy efforts in New Mexico and Wyoming.
Citigroup Global Markets Inc. and Barclays PLC will provide a $70 million loan along with $35 million in pre-bankruptcy debt.The case is Southland Royalty Company LLC, 20-10158, U.S. Bankruptcy Court for the District of Delaware