Texas-Based Oil and Gas Company, Quicksilver Resources Inc., Files Bankruptcy

Morris James LLP

On March 17, 2015, Quicksilver Resources Inc., a Texas based oil and natural gas producer and developer, and 13 of its affiliates, filed chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Delaware.  The petition lists assets of $1.2 billion and liabilities of $2.35 billion.  The case is docketed as case no. 15-10585.

Vanessa Gomez Lagatta, Sr. VP, CFO and Treasurer of Quicksilver, filed a declaration in support of the petitions and first-day motions.  In her declaration, Ms. Lagatta states that as of December 31, 2014, the debtors had approximately 585,000 net acres of oil and gas properties with proven reserves of 1.1 Tcfe and over 2000 net producing wells.  She also notes that the debtors had, as of December 31, 2014, a consolidated net loss for the year of $103.1 million.

The Lagatta Declaration reveals that the debtors have 1.098 billion in secured debt facilities as of the petition date.  The debtors also have three series of unsecured notes (the 2019, 2021 and Senior Subordinated notes), aggregating approximately $975 million in what the Legatta Declaration characterizes as “unsecured senior obligations.”

In the 3rd quarter of 2014, the debtors launched a marketing process for their assets.  Notwithstanding their efforts, none of the bids produced any viable options for asset sales.  The unsuccessful marketing process, coupled with the recent precipitous drop in commodity prices, potential springing maturities under various credit agreements, and near term liquidity shortfalls helped drive the decision to file the chapter 11 cases.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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