(Adds details of plan or reorganization, paragraphs 6-8)
By Tom Hals
Dec 14 Stone Energy Corp filed for
Chapter 11 bankruptcy on Wednesday to eliminate about $1.2
billion in debt by transferring control of the offshore oil
producer to its noteholders in the face of a two-year slump in
The Lafayette, Louisiana-based company joins scores of
oil-and-gas exploration and production companies that have filed
for bankruptcy since oil prices began falling from more than
$100 a barrel in 2014.
In a filing with the U.S. Bankruptcy Court in Houston, Stone
said it has adequate liquidity to keep up its operations without
the need for debtor-in-possession financing during the
bankruptcy proceedings, which it hopes to complete in 90 days.
Though Stone has said it has broad creditor backing for its
plan, the company's largest shareholder, Thomas Satterfield, has
said he plans to challenge the proposed restructuring in court.
Satterfield told Reuters on Wednesday he remained opposed to
the plan, which proposed giving 4 percent of the stock in the
reorganized company to shareholders, with warrants for up to an
additional 10 percent.
Noteholders would receive a 96 percent stake in the company
in exchange for their debt.
They would also receive $100 million of cash from the sale
of Stone's acreage in the Marcellus and Utica shale, which was
reduced from an October plan that proposed giving noteholders
$150 million in cash.
Stone has said it would seek court approval to sell about
86,000 acres in Pennsylvania and West Virginia for at least $350
million to an affiliate of the Tug Hill Inc investment firm,
which is based in Fort Worth, Texas.
On Dec. 5, the company said it may not be able to resume
production at its Amethyst well, which has reserves of
approximately 79 billion cubic feet of gas equivalent. Stone
Energy shut in the well in April for a technical evaluation.
Stone has cut spending and focused on high-margin
developments in the Gulf of Mexico to try to ride out the price
slump. The company reported a net loss of $1 billion in 2015 and
$474 million for the first nine months of 2016.
(Reporting by Tom Hals in Wilmington, Delaware; additional
reporting by Tracy Rucinski in Chicago; editing by Grant McCool)