KKR’s Samson Resources Files For Bankruptcy, Lenders To Take Control

KKR-owned oil and gas driller Samson Resources filed for Chapter 11 bankruptcy protection last night to carry out a debt-cutting plan reached with key lenders who will assume control of the company. Samson has more than $2.4 billion in liabilities and assets of up to $50 million. “We feel its strengths outweigh the fact that the company has had lackluster performance in the stock itself”.

The case is in U.S. Bankruptcy Court, District of Delaware, Case No: 73-0928007.

The company is planning a quick trip through bankruptcy, working toward a Dec. 1 target for the bankruptcy court to approve its restructuring plan. They had also agreed to invest another $450 million in the company in pursuit of first lien debt, agreeing to add another $35 million to provide liquidity to the company.

Debtwire previously reported that Samson’s restructuring plan has received support of 67 percent of the second-lien lenders. 68% of the second-lien lenders has already approved the plan.

Samson’s move comes as energy companies across the U.S. are facing reduced prices for crude oil and natural gas. KKR and its partners on the buyout made a big bet on the future of shale oil and gas, investing $4.15 billion in equity on the deal. In the past year, mostly smaller firms have filed for bankruptcy protection.

Private-equity firms often use borrowed money, or leverage, to buy a company with the hopes of juicing their gains on an eventual sale of an investment. Coal and natural gas prices have also dropped sharply.

KKR booked losses on Samson some time ago and didn’t immediately respond to a request for comment. Japanese trading house Itochu Corp., which took a 25% stake in the Samson buyout, in June said it was taking a full loss on its $1 billion investment.

Samson operations are mainly in in Colorado, Louisiana, North Dakota, Oklahoma, Texas and Wyoming. Samson and other companies focused on hydraulic fracking and deep drilling, in order to extract oil and gas from the core.