Exco, Azure interest purchase agreement settlement approved by court

By Caroline Salls

Pittsburgh, Nov. 19 – Exco Resources, Inc. obtained court approval of a joint venture interest sale agreement settlement reached between Exco debtors Exco Operating Co., LP and Raider Marketing, LP and Azure entities Azure Midstream Energy LLC, Azure Midstream Holdings LLC and TGG Pipeline, Ltd, according to an order filed Monday with the U.S. Bankruptcy Court for the Southern District of Texas.

Exco said Azure purchased all of it and BG US Gathering Co. LLC’s interests in joint venture TGGT Holdings, LLC in 2013 for $910 million.

As a condition for closing the joint venture interest sale, the company said Exco and BG were required to deliver to Azure an amendment to related gathering agreements that contained a minimum volume commitment. Exco and BG agreed to deliver a minimum volume of gas to TGG and Azure Energy or to otherwise make a “shortfall payment” equal to $0.40 MMBtu times one-half of the amount of the shortfall.

After a motion filed by the Exco debtors to reject the Azure letter agreement and Azure asked the court to order Exco to assume or reject the gathering agreements, it was put off by the court. Azure filed a $29.67 million claim against the Exco debtors on account of amounts owed under the gathering and minimum volume commitment agreements before the Exco bankruptcy filing and $273,016 on account of amounts owed after the bankruptcy filing date.

Under the settlement, the Exco debtors will make a $15 million initial cash payment to Azure on the effective date of their Chapter 11 plan.

In addition, the debtors will pay to Azure $6.37 million in pre-bankruptcy accrued gathering fees by Feb. 28.

The gathering agreements will be deemed assumed by Raider and assigned to Exco, provided that the parties acknowledge that the minimum volume commitment agreement will terminate on Dec. 1.

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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