Linn Energy LLC, Houston, filed voluntary petitions on May 11 for restructuring under Chapter 11 of the bankruptcy code in the US Bankruptcy Court for the Southern District of Texas. The firm says it expects its operations to continue as usual throughout the process.
Linn and units LinnCo LLC and Berry Petroleum Co. LLC entered into a restructuring support agreement with holders of at least 66.67% by aggregate outstanding principal amounts of Linn’s amended and restated credit agreement.
“We believe the restructuring support agreement reflects the confidence of our first lien lenders in the quality of our assets and represents an important step forward for the company,” explained Mark E. Ellis, Linn chairman, president, and chief executive officer.
“Like many others in our industry, Linn has been impacted by continued low commodity prices,” he said. “We believe that these steps will provide us the financial flexibility to successfully manage in the current commodity price environment and, when combined with constructive agreements with our remaining creditors and potential third party financing, will provide a platform for future growth.”
In March, Linn reported that it would hold off on paying $60 million in interest payments for bonds maturing in 2021 and 2022 (OGJ Online, Mar. 15, 2016). The firm at the time said it had an aggregate debt load of $9.3 billion, and was using “a significant portion” of its cash flow to pay interest and principal.
Linn earlier this year set a capital budget of $340 million for 2016, including $250 million of oil and natural gas capital expenditures. The firm’s core focus areas are in the Rockies, the Hugoton basin, California, east Texas and north Louisiana, Midcontinent, the Permian basin, Michigan, Illinois, and south Texas.