Sanchez Energy declares bankruptcy, secures new financing commitments
HOUSTON - Sanchez Energy Corporation today announced that the company and certain of its subsidiaries have voluntarily filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of Texas. The decision to make this voluntary filing follows an extensive review of strategic alternatives to align its capital structure with the continued low commodity price environment, and Sanchez Energy intends to use this process to substantially reduce its indebtedness and provide the financial flexibility to position for future success. The company has liquidity, comprised of cash on hand and $175 million in new committed financing as described below, to operate in the normal course and intends to interact with its commercial counterparties as usual. Non-recourse subsidiary SN EF UnSub, LP and certain other unrestricted subsidiaries of the Company are not included in these Chapter 11 proceedings.
“Sanchez Energy has assembled a high-quality asset base and has substantial liquidity to continue operating safely and efficiently, while we maintain productive relationships with our business partners and midstream counterparties,” said Tony Sanchez, III, president and chief executive officer of Sanchez Energy. “Over the last year, we have taken proactive steps to address the challenging oil and natural gas price environment, including stabilizing our production profile, improving our capital efficiency and reducing our overall cost structure. Undergoing a financial restructuring through a voluntary process represents the next phase for Sanchez Energy, as we work with our creditors on a plan to right-size our balance sheet, further invest in our assets and generate long-term value for our stakeholders. We remain committed to operating in the normal course, and I would like to thank our team of talented employees for their continued dedication to the company. I am confident in the future of Sanchez Energy.”
Sanchez Energy has received commitments from certain of its senior lenders for $175 million in new financing, of which $25 million will be used to repay borrowings and replace a letter of credit currently outstanding under the company’s existing revolving credit facility and, along with cash on hand and cash flow generated by ongoing operations, support the business and fund continued capital investment throughout the restructuring process.
As part of the Chapter 11 filing, the company has filed a number of customary motions with the Court to authorize the company to pay certain pre-petition obligations. Among other things, these motions seek authorization for Sanchez Energy to continue to operate in the normal course of business without interruption to its relationships with its royalty interest owners and working interest and joint billing partners, among others.
Court filings and information about the claims process are available on the internet at https://cases.primeclerk.com/sanchezenergy, by calling the company’s information hotline at (844) 232-0067 or by sending an email to sanchezinfo@primeclerk.com. Additional information regarding the Chapter 11 filing is included in a Current Report on Form 8-K which will be filed with the U.S. Securities and Exchange Commission (“SEC”) on Monday, Aug. 12, 2019.
