North Dakota-based shale gas company Intervention Energy Holdings LLC filed for bankruptcy protection on Friday amid a brewing battle with lender EIG Global Energy Partners.
According to company chief executive and founder, John Zimmerman, EIG was a “cooperative partner” for the majority of its time as Intervention Energy’s lender but its position had clearly changed once they had decided to build up their competing platform.”
Intervention had a $200m senior secured note from EIG in 2012, which it used to finance well development costs. As per court documents, Intervention owed EIG about $140m.
The relationship between the two began to strain when Intervention defaulted on its debt in June 2015. The parties entered into a forbearance agreement post the default, during which an equity infusion was sought and an investment bank, Evercore, was hired to look at the sale of the company.
During the sale process, Intervention managed to attract three bidders, all of which were rejected by EIG, in March 2016, as EIG intended to let the forbearance agreement expire.
Post-expiry of the forbearance agreement, a foreclosure could have led to EIG seizing the company’s assets and selling it to another company it was in talks with.
Before filing for bankruptcy, the company had reinvested $76m free cash back into the company and EIG had made an equity infusion of about $32m.