SAN FRANCISCO Chaparral Energy Inc
aims to have its bankruptcy exit plan confirmed next month,
which may require suing a co-owner of a carbon dioxide pipeline
to advance the sale of the asset, the bankrupt oil and gas
producer said in court papers on Friday.
Chaparral has a hearing on March 9 to confirm its plan to
emerge from Chapter 11 bankruptcy, funded in part by asset
sales. The company filed for bankruptcy in May after talks with
stakeholders failed to produce a restructuring support agreement
to tackle its financial troubles.
Chaparral said it no longer needed the pipeline in Oklahoma
running from a Koch Fertilizer LLC fertilizer plant. It
transports carbon dioxide used in “flooding” fields to help
extract oil and gas from depleted wells.
Chaparral and Merit Energy Co together own more than 90
percent of the pipeline. Under an agreement, Merit bought CO2
from the Koch plant and set aside a portion for Chaparral’s use.
Their deal expired in December and talks to renew it failed,
Chaparral said, adding that talks to acquire CO2 directly from
Koch had also failed.
The company said it had determined, along with its major
stakeholders, that even if it were to get access to the CO2, it
would only be able to extract “relatively modest” amounts of oil
and gas in the two fields, making the pipeline sale the best
Chaparral noted that the pipeline could be converted to
transport oil, making its location in central Oklahoma a
valuable asset. A number of companies have expressed interest,
but they want full ownership of the pipeline, Chaparral said.
If the pipeline’s co-owners do not consent to a sale,
Chaparall will press an adversary proceeding within its Chapter
11 case to force a sale, the Oklahoma City,
Oklahoma-headquartered company said.
The case is In re Chaparral Energy Inc et al, in U.S.
Bankruptcy Court for the District of Delaware, No. 16-11144.
For Chaparral: Joseph Barsalona II, Mark Collins, John
Knight and Brendan Schlauch of Richards Layton & Finger, and
Richard Levy, Keith Simon and David McElhoe of Latham & Watkins
#1 Lawyers Search Engine