Nov. 7, 2016 11:19 a.m. ET
Saratoga Resources Inc. has emerged from a chapter 11 proceeding that took several twists and turns.
The oil and gas explorer said it officially exited bankruptcy on Wednesday, about two months after it won court approval for its chapter 11 plan.
Earlier this year, Saratoga sold most of its oil and gas assets to Energy Reserves Group II, or ERG, for $14 million, an offer that included debt forgiveness and the assumption of other liabilities.
As a result, the company’s chapter 11 plan revolves around the remaining oil and gas assets, which are inactive.
Saratoga will consider these assets as a launching point for its post-bankruptcy operations and, now that it is “substantially debt-free,” may also consider acquiring new properties.
“We plan to evaluate opportunistic acquisitions of assets in a target rich environment of distressed operators,” Saratoga Chairman and Chief Executive Thomas Cooke said in a statement. “We also plan to take a fresh look at our legacy assets...to evaluate upside potential and potential restoration or establishment of production.”
Saratoga, based in Houston, sought chapter 11 protection on June 18, 2015, amid the historic fall in oil and gas prices.
Early in its chapter 11 case, the company had floated a debt-for-equity swap that would have asked bondholders—funds managed by Blackstone Group’s GSO Capital Partners and Stonehill Capital Management—to forgive more than $200 million in debt for control of the reorganized company.
But Saratoga and the bondholders frequently clashed throughout the case, leaving Saratoga without a restructuring deal and burning through cash. In February, the company warned its chapter 11 case would reach a “calamitous end” if it couldn’t reach a deal soon.
The next month, GSO and Stonehill sold their bond debt to ERG for $10 million. Citing the lack of a restructuring plan, ERG immediately sought to convert Saratoga’s chapter 11 reorganization to a chapter 7 liquidation, where a trustee would be appointed to sell off the company’s assets.
Saratoga countered with a proposal to sell most of its oil and gas assets to ERG, subject to higher bids at auction. That sale closed in May.
Saratoga’s chapter 11 plan, which court papers say the U.S. Bankruptcy Court in Lafayette, La., confirmed on Aug. 30, allowed existing shareholders to keep ownership of the restructured company.
