Endeavour to sell all U.S. assets, revoke plan over waning oil prices

By Kali Hays

New York, April 30 – Endeavour International Corp. is seeking approval of bid procedures for a proposed sale of substantially all company assets located in the United States as its proposed reorganization is no longer a viable option, according to a motion filed Wednesday with the U.S. Bankruptcy Court for the District of Delaware.

Assets included in the sale are exploration licenses and/or producing properties located in Colorado, Louisiana, Montana, New Mexico, Pennsylvania and Texas, which total approximately 18% of the company’s proven oil and gas reserves.

Endeavour said that some of its non-debtor affiliates are also beginning to explore “restructuring alternatives,” including preparing for a separate sale and marketing process of substantially all assets located in the United Kingdom, which represent the remaining 82% of the company’s oil and gas assets, according to the motion.

As previously reported, the company said it needed to evaluate its business plan and restructuring support agreement in light of a continuing drop in oil and gas prices and delayed a Feb. 9 hearing to confirm its proposed plan of reorganization indefinitely.

The plan was based on a support agreement with more than two-thirds of Endeavour’s noteholders and provided for a reduction of about $598 million of the company’s existing debt and about 43% of its annual interest obligations.

The reductions were expected to provide for $50 million in annual cash flow to be reinvested in the company.

However, with the current condition of the oil and gas market, Endeavour said that the proposed plan and the support agreement “are no longer feasible” and the company will withdraw the plan as the support agreement has been terminated.

“Even if the proposed plan were to be confirmed, if oil and gas prices remain at their current levels, the debtors anticipate that there could be a breach of their leverage ratio covenant in the third quarter of 2015,” which is included in a credit agreement with END Finco LLC and Credit Suisse AG, Cayman Islands Branch, according to the motion.

While Endeavour is unable to formulate a revised restructuring support agreement, it intends to continue creditor negotiations to address its financial situation, including the “exploration of such alternatives as additional capital, repayment of debt, waivers or amendments under existing debt documents and continuing review of allocation recoveries in the current pricing environment.”

Bid procedures

Under the proposed bidding procedures, any potential bidder must submit an executed asset purchase agreement by 5 p.m. ET on Aug. 4.

A baseline bid for the assets has not been set, but any qualified bid must be accompanied by a cash deposit equal to 10% of the purchase price.

Endeavour does not yet have a stalking horse bidder for the assets, but any such bid is due by 5 p.m. ET on June 22. The company will announce any accepted stalking horse by July 8, according to the motion.

If endeavor receives one or more qualified bids for the assets, an auction will be held on Aug. 11. Bids at auction will be required in increments of $250,000.

The company asked that a sale hearing be scheduled for Aug. 26 and a hearing to consider the bid procedures is set for May 20.

Endeavour is a Houston-based oil and gas exploration and production company focused on the North Sea and the United States. The company filed for bankruptcy on Oct. 10, 2014 under Chapter 11 case number 14-12308.

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