Intervention Energy filed for bankruptcy amid lender dispute

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.

Source: WSJ



Rig count in the US touches December 2009 lows: Baker Hughes

According to Baker Hughes Inc.,  the number of operational oil rigs in the United States declined to lows last observed in December 2009, a clear sign of the effect of plunging crude oil prices.

For the week ending 19 February 2016, operators shut 26 rigs, bringing the total count to 413. Total number of operational rigs during the same period in the U.S. was 514, comprising of 413 oil rigs and 101 gas exploration rigs.

There was some optimism in the market based on the meeting of OPEC members Saudi Arabia, Qatar and Venezuela and non-OPEC member Russia that planned to curtail production to January 2016 production levels. The supply cut would help prop-up crude oil prices to around $50 by June 2016.

Market analysts forecast the rig count to decline in the coming months and then rise in line with rising crude oil prices.

U.S. shale gas producers have hedged 2017 crude oil prices in the futures market at around $45 a barrel, anticipating a price recovery in prices.

Source: Reuters, Marinelink