Saratoga Resources, Inc. Files Voluntary Petitions for Protection under Chapter 11; Operations to Continue During Reorganiza...
June 18 2015 - 7:46PM
Business Wire
Saratoga Resources, Inc. (NYSE MKT: SARA; the “Company” or
“Saratoga”) today announced the filing of voluntary Chapter 11
petitions for itself and certain operating subsidiaries in the U.S.
Bankruptcy Court for the Western District of Louisiana in
Lafayette.
Saratoga intends to continue to operate its business and manage
its properties as debtors in possession. At this time, Saratoga
believes it has sufficient cash to operate its businesses in the
immediate term without need for debtor-in-possession financing.
Today’s bankruptcy filing follows earlier challenges relating to
the Company’s field operations coupled with the precipitous decline
in oil and gas prices which resulted in lower than projected
revenues and profitability and an unexpected arbitration award
against the Company. Exhaustive initiatives have been undertaken in
the Company’s field operations, remedying many of the earlier
operating issues, and an ongoing cost containment program is
bringing down operating costs to address the lower commodity price
environment. Production optimization initiatives and infrastructure
improvements undertaken during the last twelve months have
addressed the principal causes of decreased run times, gas lift gas
shortages, mechanical issues and flow line capacity
constraints.
Thomas F. Cooke, Saratoga’s Chairman and Chief Executive
Officer, said “As a result of the steep decline in commodity prices
during the second half of 2014 and continuing into 2015, compounded
by production declines associated with run time issues in early
2014, which have subsequently been addressed, we have been
operating in a cash constrained environment and have undertaken
strategic initiatives to address operations in the current climate,
including entering into forbearance agreements with our principal
lenders and undertaking an extensive, cost-cutting program with
targeted LOE and G&A savings of more than $13 million for 2015
compared to 2014. We have been working closely with our secured
lenders to try to address liquidity issues with a view to either
restructure or repay existing debt and preserve collateral from
hostile action arising from the outstanding arbitration award and
have retained advisors to assist in the evaluation of potential
alternatives to either restructure or repay the existing secured
debt. We have also engaged in discussions with Harvest Operating,
the holder of the adverse arbitration award totaling $3.7 million,
and are pursuing separate legal claims against Harvest Operating
which may ultimately offset, in part or in whole, the arbitration
award. Without an acceptable resolution of the arbitration award,
our management and our principal lenders determined that a court
administered reorganization would offer the best means of
addressing the arbitration claim and the company’s existing debt
structure and realizing the anticipated benefits of our drilling,
workover and recompletion program.”
“We hope to use the Chapter 11 process to avert adverse action
by Harvest Operating while still permitting us to pursue our legal
claims against Harvest Operating as well as to arrive at a
satisfactory restructuring or retirement of our existing secured
debt while continuing to develop our holdings, grow our production
and revenues and reduce our operating expenses,” Mr. Cooke
said. “We appreciate the support of our employees, vendors,
business associates and stockholders. We want to assure them that
we intend to continue doing business while we complete the
processes before us and expect that a vast majority of our
suppliers, vendors and business associates will see no disruption
in our business. We believe that our long-term prospects remain
solid, that we continue to have substantial untapped reserves and
that our development program will continue to increase daily
production. The process we have undertaken will better allow us to
realize the full value of our properties for the benefit of both
our creditors and our stockholders and position us to benefit from
what we expect is an inevitable recovery in oil and gas
prices.”
Saratoga expects to file its monthly reports to the bankruptcy
court under Form 8-K.
About Saratoga Resources
Saratoga Resources is an independent exploration and production
company with offices in Houston, Texas and Covington, Louisiana.
Principal holdings cover approximately 51,500 gross/net acres,
mostly held by production, located in the transitional coastline
and protected in-bay environment on parish and state leases of
south Louisiana and in the shallow Gulf of Mexico Shelf. Most of
the company’s large drilling inventory has multiple pay objectives
that range from as shallow as 1,000 feet to the ultra-deep
prospects below 20,000 feet in water depths ranging from less than
10 feet to a maximum of approximately 80 feet. For more
information, go to Saratoga's website at www.saratogaresources.com
and sign up for regular updates by clicking on the Updates
button.
Forward-Looking Statements
This press release includes certain estimates and other
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, including, but not limited to,
statements regarding the Company’s ability to continue to operate
its business and to manage its properties as debtors-in-possession,
the sufficiency of cash on hand to support operations in the
intermediate term, the ability of the Company to operate without
debtor-in-possession financing, the ability of the Company to
arrive at a satisfactory arrangement with its creditors, the
ability of the Company to arrive at a satisfactory resolution of
the Harvest Operating arbitration award, the ultimate LOE and
G&A cost savings that may be realized, the ability of the
Company to maintain improved run times and to grow production
levels, expected future increases in oil and gas prices, the
ability of the Company to fund development activities, the ultimate
preservation of equity and the ultimate outcome of the Chapter 11
proceeding. Words such as "expects”, "anticipates", "intends",
"plans", "believes", "assumes", "seeks", "estimates", "should", and
variations of these words and similar expressions, are intended to
identify these forward-looking statements. While we believe these
statements are accurate, forward-looking statements are inherently
uncertain and we cannot assure you that these expectations will
occur and our actual results may be significantly different. These
statements by the Company and its management are based on
estimates, projections, beliefs and assumptions of management and
are not guarantees of future performance. Important factors that
could cause actual results to differ from those in the
forward-looking statements include the factors described in the
"Risk Factors" section of the Company's filings with the Securities
and Exchange Commission. The Company disclaims any obligation to
update or revise any forward-looking statement based on the
occurrence of future events, the receipt of new information, or
otherwise.
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version on businesswire.com: http://www.businesswire.com/news/home/20150618006482/en/
Saratoga Resources, Inc.Thomas F. Cooke,
713-458-1560Chairman/Chief Executive OfficerorAndy Clifford,
713-458-1560PresidentorRandal McDonald, 713-458-1560Vice President
- Finance and Accountingwww.saratogaresources.net