Warren Resources: Bankruptcy possible absent restructuring agreement

By Caroline Salls

Pittsburgh, Feb. 9 – Warren Resources, Inc. has initiated discussions with its creditors regarding a restructuring of its debt obligations, according to a news release.

If it cannot come to a workable agreement regarding an out-of-court restructuring, Warren said it will have to seek protection from its creditors through a bankruptcy proceeding in order to preserve and maximize value for its stakeholders.

“These are very difficult times for Warren and its industry peers,” president and chief executive officer James A. Watt said in the release.

“We are making significant cuts in both G&A and overall operating costs, but we must seek further concessions from our various debtholders and vendors to survive what is anticipated to be a lengthy downturn in commodity prices.”

As of Dec. 31, Warren’s first-lien creditors held $235 million in principal amount of debt, second-lien creditors held $51 million in principal amount of debt, and investors held $167 million principal amount of Warren’s unsecured senior notes.

Warren had $26.8 million in cash at year-end 2015.

In addition, the company said it recently announced that it would not make the $7.5 million interest payment due Feb. 1 on its unsecured notes, and instead expects to use the applicable 30-day grace period to initiate negotiations with noteholders.

According to the release, Warren’s total revenue is forecast to be $61.1 million for 2016, down from $89.4 million in 2015.

Cash interest for 2016 is projected to be $37.3 million, up from $30.4 million last year.

Warren is a New York-based energy company.

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