Credit & Capital

Templar Energy Goes Bankrupt to Complete Sale

With its Chapter 11 filing, Templar is “joining a growing list of distressed operators amid the sharpest oil market downturn in recent memory.”
Matthew HellerJune 2, 2020

Oil and gas driller Templar Energy has filed for Chapter 11 bankruptcy to effectuate a sale of its assets amid plunging commodity prices.

The company had begun the sale process in February, attracting a dozen indications of interest by mid-April. But it said Monday that it had decided to use the bankruptcy process to consummate a sale.

Since February, “the volatility in oil and natural gas markets has been exacerbated by the sudden combined impact of the COVID-19 pandemic and the oil price war between Saudi Arabia and Russia, with oil prices descending to the lowest level since 2002,” CEO Brian Simmons said in a court declaration.

“Independent oil and gas companies such as [Templar] have been especially hard-hit, as their revenues primarily are generated from the sale of unrefined oil, natural gas, and [natural gas liquids],” he noted.

Templar has outstanding funded debt obligations of approximately $426 million that mature in September. Lenders have agreed to provide it with $25 million in funding to keep it operating in Chapter 11.

As Natural Gas Intelligence reports, Templar is “joining a growing list of distressed operators amid the sharpest oil market downturn in recent memory.”

“It appears no oil-producing region of the United States is safe from the carnage, as evidenced by the Chapter 11 filings of Bakken Shale heavyweight Whiting Petroleum and Wyoming-focused Ultra Petroleum,” NGI added.

Templar, which was founded in 2012 by former CEO David Le Norman, focuses on the development and acquisition of crude oil and natural gas reserves in the Greater Anadarko Basin of northeastern and western Oklahoma and the Texas Panhandle.

As of May 2020, it was producing about 18,000 barrels of oil equivalent per day (Mboe/d), down from 21,000 Mboe/d in December.

An out-of-court restructuring in 2016 eliminated $1.45 billion in second-lien debt and injected $365 million of equity capital into the company. “Based on the robust engagement by bidders during the prepetition process, the debtors are hopeful for an active auction process,” Simmons said.