Mach Resources LLC and Bayou City Energy Management LLC once again look to pick up assets in Chapter 11.
Court papers show Houston upstream energy company Alta Mesa Resources Inc. on Jan. 15 is set to auction its assets in connection with a $310 million stalking-horse offer from joint venture BCE-Mach III LLC. Bayou City, a Houston upstream-focused private equity firm, already is a backer of Alta Mesa.
The lead bid covers both Alta Mesa’s assets and those of its nonbankrupt Kingfisher Midstream LLC unit, which provides midstream energy services, including crude oil and gas gathering, processing and marketing and produced water disposal in the Stack play. Kingfisher would file for Chapter 11 by Jan. 15 to complete the sale, which would reserve $85.25 million for Kingfisher’s estate, with the remainder of proceeds allocated to Alta Mesa.
Alta Mesa and Kingfisher combined in February 2018 via a reverse merger with Silver Run Acquisition Corp. II that then was expected to create a public company with a market capitalization of $3.8 billion. Alta Mesa, however, said it subsequently faced depressed oil prices, a lack of liquidity and too much debt.
Under amended bidding procedures approved Dec. 19 by Judge Marvin Isgur of the U.S. Bankruptcy Court for the Southern District of Texas in Houston, most interested parties have until Jan. 8 to submit offers for Alta Mesa’s assets; the debtor’s secured lenders have until Jan. 10. BCE-Mach would receive a 3% breakup fee if topped at auction.
Kingfisher will seek approval of the same bidding procedures once it files for bankruptcy protection, according to papers filed Dec. 31.
In a Dec. 17 motion to modify its bidding procedures order, Alta Mesa said it was working with Kingfisher on proposals for a joint sale of their assets to resolve disputes between the parties and maximize value for stakeholders.
Bayou City and Mach Resources, an Oklahoma City oil and natural gas producer, previously sought to acquire the assets of bankrupt White Star Petroleum LLC through BCE-Mach LLC. They were outbid, however, by Contango Oil & Gas Co., which offered $132.5 million in September.
BCE-Mach made its first acquisition of properties in Barber and Harper counties in Kansas in May, and another vehicle, BCE-Mach II LLC, in July said it had agreed to acquire producing properties in Oklahoma and Texas from two sellers.
Bayou City’s portfolio also includes BCE Roadrunner LLC, which is partner to a joint development agreement with formerly bankrupt Chaparral Energy Inc. (CHAP).
Alta Mesa and six affiliates entered Chapter 11 on Sept. 11 with plans to continue a strategic review. The Bayou City, Riverstone Investment Group LLC and HPS Investment Partners LLC portfolio company began exploring alternatives with Perella Weinberg Partners LP and affiliate Tudor Pickering Holt & Co. Advisors LP in April, but it failed to reach a consensual restructuring deal before it had to begin repaying an overadvance on its revolving credit agreement.
In its petition, Alta Mesa listed about $1.4 billion in assets as of Dec. 31.
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