Alta Mesa Resources files Chapter 11 to restructure balance sheets

By Caroline Salls

Pittsburgh, Sept. 12 – Alta Mesa Resources, Inc., Alta Mesa Holdings, LP, Alta Mesa Holdings GP, LLC, OEM GP, LLC, Alta Mesa Finance Services Corp., Alta Mesa Services, LP and Oklahoma Energy Acquisitions, LLC filed Chapter 11 bankruptcy Wednesday in the U.S. Bankruptcy Court for the Southern District of Texas.

According to a news release, the companies’ midstream platform, Kingfisher Midstream, LLC and its subsidiaries, are not part of the Chapter 11 reorganization process.

“We believe that the Chapter 11 process provides the best pathway for Alta Mesa Resources and Alta Mesa Holdings to restructure their respective balance sheets and to regain the financial flexibility necessary to develop their large position in the STACK in a manner that will maximize value for all their stakeholders,” Alta Mesa Resources executive chairman Jim Hackett said in the release.

Despite considerable progress in reducing costs and improving well results, Alta Mesa said the companies continue to operate against a historically challenging commodity price environment and a capital market that is highly constrained for energy companies. The company said these factors ultimately made bankruptcy protection the best option as the debtors continue production operations while negotiating with their lenders.

According to an 8-K filed with the Securities and Exchange Commission, the Alta Mesa debtors will immediately begin a marketing process to sell their assets and the assets of some of their non-debtor affiliates.

The company said in the 8-K that some of the debtors have also filed a complaint seeking a bankruptcy court ruling that the crude oil, gas and water gathering agreements between debtor Oklahoma Energy Acquisitions LP and non-debtors Kingfisher Midstream, LLC and Oklahoma Produced Water Solutions, LLC can be rejected.

Alta Mesa has also requested court approval to use the cash collateral of the lenders under a holding company pre-bankruptcy loan.

According to court documents, Alta Mesa has $1 billion to $10 billion in both assets and debt.

The company’s largest unsecured creditors are U.S. Bank NA of St. Paul, Minn., with a $509.28 million unsecured note claim; TGS USA Corp. of Houston, with a $1.61 million trade debt claim; QES Pressure Pumping LLC of Houston, with a $1.34 million trade debt claim; Kodiak Gas Services LLC of Montgomery, Tex., with a $1.18 million trade debt claim; and Chaparral Energy LLC of Oklahoma City, with a $1.16 million trade debt claim.

In addition, Alta Mesa Resources announced that its board of directors has approved several leadership changes. The company said these changes, which are effective immediately, will help provide a more optimal management structure for the future and reduce general and administrative costs.

Hackett, who recently held the title of interim chief executive officer, has resumed his former role as executive chairman and will remain involved with the board and management team in the restructuring process. Mark Castiglione, who was previously interim executive vice president strategy and corporate development, has been promoted to CEO. Randy Limbacher, formerly interim president, has accepted the role of executive vice president of strategy.

John Campbell, formerly interim chief operating officer, has become president and COO. Kim Warnica will continue as executive vice president, general counsel, chief compliance officer and secretary, while John Regan will remain executive vice president and chief financial officer.

The company is represented in the bankruptcy proceedings by Porter Hedges LLP.

Alta Mesa is an onshore oil and gas company based in Houston. The Chapter 11 case number is 19-35133.

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