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Black Elk Energy seeks DIP financing to fund P&A plan
By Sheri Kasprzak
New York, March 7 – Black Elk Energy Offshore Operations LLC entered an emergency motion on March 7 in the U.S. Bankruptcy Court for the Southern District of Texas to obtain a post-bankruptcy financing after choosing not to go through with a previous loan.
Black Elk received approval for a $7.75 million debtor-in-possession loan from Montco Oilfield Contractors, LLC, but it chose not to borrow under the facility because it carried execution risks, including concerns that the court would sustain objections and that necessary parties would not participate in the plugging and abandonment plan (P&A plan).
“In furious negotiations after the interim approval of the Montco DIP motion, the ad hoc noteholders (with the possible participation of other noteholders under the indenture) and Argo agreed to fund the new DIP loan on economic terms similar to those contained in the Montco DIP motion, with the notable exception that the ad ho noteholders will receive a rollup of their prepetition debt against certain specified collateral,” said the motion.
“The new DIP loan is expected to face significantly fewer credible objections than the Montco DIP motion would have.”
The final order will allow Black Elk to access up to $7 million in a DIP credit agreement and give it the ability to obtain up to $500,000 in post-petition litigation financing to allow the creditors’ committee to investigate certain claims.
A hearing on the matter is scheduled for March 18.
Based in Houston, Black Elk Energy is an oil and gas company that filed for bankruptcy on Sept. 15, 2015, under Chapter 11 case number 15-34287.
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