On Jan. 27, 2020, Fort Worth-based Southland Royalty Company LLC, a natural gas-focused energy company, filed for Chapter 11 bankruptcy.
Southland, which is 80-% owned by EnCap Investments LP of Houston and 20 % by MorningStar Partners LP, said it will seek to sell the company or reduce its debt significantly, in the filing. The company said it owes about $540 million to lenders. The Chapter 11 case is pending before the Honorable Karen B. Owens under Case No. 20-10158.
According to the Bankruptcy petition, the company has been adversely impacted by a downturn in the oil and gas industry.
“[T]he sustained downturn in the oil and gas sector has created an extremely challenging environment for the Debtor’s business, depressing revenues generated by production activities, while at the same time reducing the value of proven reserves,” according to the filing from the Chief Restructuring Officer Frank A. Pometti.
The filing describes Southland Royalty as “an upstream energy company focused on the acquisition, development and exploitation of oil, natural gas and natural gas liquid (“NGL”) reserves in North America. [Southland] owns a unique land position comprised of leasehold and mineral interests in approximately 745,000 net working interest acres across both the Wamsutter field of the Greater Green River Basin in southwestern Wyoming and the San Juan
Basin in southwestern Colorado and northwestern New Mexico, including
approximately 150,000 net working interest mineral acres in the Wamsutter field.”
According to the filing, the Dallas-based law firm of Shearman & Sterling LLP has been retained as general bankruptcy counsel for the company.