Ultra Petroleum Corp. has voluntarily filed under Chapter 11 of the US Bankruptcy Code in the US bankruptcy court for the Southern District of Texas, Houston Division to implement an agreement in principle with certain lenders and noteholders to pursue restructuring.
It is the second bankruptcy filing in 4 years (OGJ Online, May 2, 2016).
The company has agreed to terms with holders of 100% of the loans under its first lien RBL credit facility, 85% of the loans under its first lien term loan, and 67% of its second lien notes.
The company has secured a commitment for financing of up to $25 million from certain holders of the company’s first lien term loan, which combined with cash on hand and its normal operating cash flow, is expected to allow Ultra to maintain normal operations and meet ongoing financial commitments throughout the Chapter 11 restructuring period. All of the company’s existing lenders under its first lien RBL credit facility have executed commitment letters to provide exit financing in the form of a revolving credit facility with an initial borrowing base of $100 million and total commitments of $60 million.
Through the Chapter 11 restructuring, the company expects to eliminate some $2.0 billion in debt. The company’s goal is to finalize the process within the next 3 months. Various “first day” motions have been filed. Approval of these motions is expected and will allow the company to continue to, among other things, pay employee wages and provide benefits without interruption in the ordinary course of business. The company also expects to pay suppliers and vendors in full under normal terms for goods and services and will continue making royalty and working interest payments when due.
For the year’s first quarter, production reached 554 MMcfe/d.