Sabine Oil & Gas Corporation

Case Overview

Focused on the domestic acquisition, development, exploitation and exploration of oil and natural gas properties, Sabine Oil & Gas Corporation (Sabine) concentrates its efforts primarily in Texas. Similar to other independent energy producers over the last few years, Houston-based Sabine fell victim to falling energy prices which adversely affected the value of its reserves resulting in defaults to creditors and lenders.

Due to competing interests, the company’s lenders and its unsecured creditors were unable to reach an amicable solution. While the creditors’ committee was advocating for litigation against Sabine’s lenders rather than settling the dispute, Sabine eventually decided to file for Chapter 11 bankruptcy protection in the Southern District of New York.

Successful Outcome

Sabine engaged Stretto to provide administrative support and depository services during the Chapter 11 process. Stretto was able to leverage its national bank network to select the specific financial institution best suited to efficiently handle this engagement.

Stretto assigned a team of consultants with substantive experience working with high-balance corporate restructuring deposits to secure the necessary bank accounts, and assist the turnaround professionals in managing deposits totaling approximately $225 million. The consultants were supported by Stretto’s Banking Services Team comprised of trained financial-services experts – and were able to offer practical guidance and direction in executing a multitude of banking transactions.

After a year-long battle with creditors, Sabine’s Plan of Reorganization (Plan) was confirmed and the company emerged from Chapter 11 protection the following month. Prior to the confirmation, Sabine was able to unload specific pipeline contracts with some of its midstream operators. This unusual action set a precedent for exploration and production companies as service agreements related to operations for gathering and transporting natural gas were long-considered immune from bankruptcy proceedings.

Post-confirmation, the Plan reduced the company’s debt from $2.8 billion to $350 million, with its lenders receiving nearly all of the company’s stock. Sabine also exited with a new $300 million senior secured credit facility. Having successfully restructured its balance sheet and emerging stronger from bankruptcy as a private company, Sabine is focused on maximizing its stable of assets and is well-positioned to further increase the company’s overall value.

For more information about Stretto’s Corporate Restructuring solution, please contact Brian Soper.