Fort Worth energy firm founded by oil, gas veterans files Chap. 11

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Enduro Resource Partners LLC on May 15 announced it has filed for bankruptcy reorganization as the company looks to sell its assets and pay off creditors.

Enduro was founded in 2010 by prominent Fort Worth energy industry veterans and father-and-son Jon Brumley and Jonny Brunley.

The company filed voluntary petitions for a court-supervised proceeding under chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Enduro said it intends to operate in the ordinary course of business during the sale process and chapter 11 cases. Enduro Royalty Trust, a publicly-traded Delaware statutory trust formed on May 3, 2011, has not filed a chapter 11 petition and will also continue to operate in the normal course, the company said.

Following an extensive marketing and sale process the company, its Board of Managers, and its first lien lenders determined that the sale of all of Enduro’s assets (including ownership of its outstanding units in Enduro Royalty Trust) through a court-supervised process is the best course of action in terms of maximizing value for all stakeholders, according to the filing. Enduro expects the ultimate purchaser of its trust units to assume Enduro’s responsibilities under the Amended and Restated Trust Agreement with Enduro Royalty Trust.

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Enduro has reached an agreement with its first lien lenders to utilize their cash collateral to fund the company throughout the sale process. This arrangement, which is subject to court approval, is expected to support the company’s day-to-day operations during this process and to be sufficient to fund Enduro’s operations during the chapter 11 process. Employees, royalty, working interest, and joint interest billing partners, and vendors should expect no material impact on day-to-day operations or interactions with the company, according to the filing. Enduro has both operated and non-operated oil and gas assets in Texas, Louisiana, New Mexico, North Dakota and Wyoming, as well as royalty interests in certain properties in Montana, according to the filing.

Enduro has approximately 70 employees of whom 42 are located in the company’s Fort Worth headquarters at 777 Main St.

Enduro also filed a motion seeking authorization to pursue a sale process under Section 363 of the U.S. Bankruptcy Code. To this end, Enduro has entered into three stalking horse purchase agreements, copies of which were filed with the court. These purchase agreements are subject to higher and better bids, which Enduro expects to begin soliciting in accordance with the process described in the applicable filings with the court. Companies typically use a “stalking horse” bid as an initial bid on the assets of a company, setting a floor for the price of a company’s assets.

In the filing, the company said that it, like many other upstream oil and gas companies, have been impacted by a drop and subsequent “depressed levels in oil and gas prices, which never recovered far enough to make the [company’s] capital structure sustainable.”

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According to the filing, the company owes about $4 million to its top 30 creditors. Among those creditors are Chesapeake Energy: $511,372; Apache Corp.: $379,343; XTO Energy: $262,258; Pioneer Natural Resources: $80,339; and Basic Energy Services: $45,010.

Jon Brumley’s energy career goes back to the 1970s when he was CEO of Southland Royalty Co., later co-founding Cross Timbers Oil, which became XTO Energy. The Brumleys later started Encore Acquisition Co., which they sold to Denbury Resources to $4.5 billion in 2010.

The company also filed a number of customary motions with the court seeking court authorization to support its operations, including the payment of employee wages, salaries, and benefits. Enduro is also seeking court authorization to meet its outstanding obligations to its royalty, working interest, and joint interest billing partners, as well as certain vendors. The company said it expects to receive court approval for these requests shortly.