Exco Resources disclosure statement and BHP claim settlement OK’d

By Caroline Salls

Pittsburgh, Nov. 5 – Exco Resources, Inc. obtained court approval of the disclosure statement for its plan of reorganization, according to an order filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

The company said the plan provides for a reorganization of the Exco debtors as a going concern with a significant reduction in long-term debt and a stronger, de‑levered balance sheet.

Under the plan, holders of 1.5-lien notes claims will receive payment in full in cash.

Holders of 1.75-lien term loan facility claims will receive 82% of the new common stock of the reorganized company, subject to dilution by a management incentive plan, and secured trust beneficial interests.

Holders of second-lien term loan facility claims, unsecured notes claims and general unsecured claims will receive an unsecured settlement recovery, comprised of 18% of the new common stock, $15.35 million in cash and unsecured trust beneficial interests.

Holders of convenience claims will receive a share of $5 million in cash.

Raider Marketing claims will be deemed cancelled, and holders will receive no distribution.

Settlement details

In addition, Exco received court approval of a claim settlement between its Exco Operating Co., LP debtor and several BHP entities, including BHP Billiton Petroleum (KCS Resources), LLC, BHP Billiton Petroleum Properties (NA), LP, BHP Billiton Petroleum (TxLa Operating) Co., Petrohawk Energy Corp. and Winwell Resources Inc.

Last month, BHP Billiton Petroleum and BHP Billiton Petroleum Properties filed a lawsuit alleging that Exco refuses to turn over $9.32 million in hydrocarbon sale proceeds that are attributable to BHP’s royalty and working interests.

BHP said Exco Operating Co., LP served as operator of properties in which BHP owned royalty and working interests. The Exco debtors received monthly proceeds from the sale of hydrocarbons that are attributable to BHP’s interests.

Through late 2016, BHP said Exco placed its interests and at least $9.32 million in production proceeds that are due to be distributed to the plaintiffs in “suspense status” because of a title dispute between BHP and a third party regarding its interests.

However, BHP said “the debtors improperly refused to release BHP’s suspended proceeds” when the title dispute was resolved.

In addition, despite claiming that it would place the funds into a court registry, BHP alleges that Exco “instead comingled such funds with other funds of the debtors.”

According to the settlement motion, the BHP entities filed $21.31 million in claims against the Exco debtors, as well as two claims in contingent, unliquidated amounts.

Under the settlement, the BHP entities will have $4.5 million in general unsecured claims.

In addition, the BHP entities agreed not to object to an Exco Chapter 11 plan that incorporates the settlement and not to opt out of specified plan releases.

Exco is a Dallas-based oil and gas exploration and production company operating in Texas, North Louisiana and Appalachia. The company filed for bankruptcy on Jan. 15, 2018 under Chapter 11 case number 18-30155.

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