Saratoga Resources meets plan conditions, emerges from bankruptcy

By Caroline Salls

Pittsburgh, May 14 - Saratoga Resources, Inc. emerged from Chapter 11 bankruptcy after meeting all of the conditions to effectiveness of its plan of reorganization, according to a company news release.

In conjunction with its exit from bankruptcy, the company entered into amendments extending and modifying terms of its principal credit facilities.

Under the plan, all creditors holding allowed claims will be paid in full, and all equity holders will retain their existing shares.

"We are very pleased to have emerged from bankruptcy with our assets intact, our shareholders' position substantially unchanged and our debt obligations restructured to reduce the interest burden on our company," chief executive officer and chairman Thomas F. Cooke said in the release.

"During the course of the bankruptcy, in spite of difficult circumstances, our team has managed to grow our reserves and production levels while bringing down our operating expenses.

"With our emergence from bankruptcy, increased production, improved profitability, identification of previously unevaluated drilling prospects and a significant reduction in our monthly interest expense, we believe Saratoga is well positioned to resume its drilling and development program and to realize the full value of its holdings."

Saratoga president Andy C. Clifford said in the release, "We are exiting Chapter 11 with a good cash cushion that will be supplemented monthly from existing production and reduced interest payments.

"Our ongoing goal of reducing operating costs has been greatly assisted with our recent insurance renewal with an 8% decrease in annual premium thanks to the great work of our insurance brokers, McGriff, Seibels & Williams."

As previously reported, under the plan:

• Payment on the Macquarie and Wayzata secured claim will include interest and attorneys fees and expenses and will be made in monthly payments in accordance with the credit agreement.

Wayzata will also receive a warrant for up to $2 million shares;

• Holders of Oil Well Lien Act claims and other secured claims will receive payment for 80% of their claim on the plan effective date and 20% within 12 months of the effective date;

• Holders of general unsecured claims will be paid 75% of their claim on the effective date and the other 25% within 12 months;

• State lessor audit royalty claims will be paid in 24 monthly installments;

• Holders of non-warrant equity claims and warrants will retain their interests and warrants; and

• Interest on management note claims will be paid over 40 months, with the claim to be paid in full on the 40th month after the effective date.

Saratoga, an Austin, Texas-based oil and gas exploration and production company, filed for bankruptcy on April 1, 2009. Its Chapter 11 case number is 09-50398.

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